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Trade Policy Uncertainty and Exports: Evidence from China's WTO Accession

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  • Ling Feng
  • Zhiyuan Li
  • Deborah L. Swenson

Abstract

To understand the effects of trade policy uncertainty on firm-level export decisions, we study firm-product data on Chinese exports to the U.S. in the years surrounding China’s 2001 WTO accession. Following predictions based on a model of heterogeneous firms, we provide empirical evidence that product-level tariff uncertainty reduction spurred a notable reallocation of export activities across firms, largely due to extensive margin entries and exits. In addition we document accompanying changes in prices and quality that coincided with this reallocation: firms that provided higher quality products at lower prices entered the U.S. export market, while firms that had higher prices and provided lower quality products exited.

Suggested Citation

  • Ling Feng & Zhiyuan Li & Deborah L. Swenson, 2014. "Trade Policy Uncertainty and Exports: Evidence from China's WTO Accession," CESifo Working Paper Series 4780, CESifo.
  • Handle: RePEc:ces:ceswps:_4780
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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