Overview and Paper
Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo construct a monthly index of Trade Policy Uncertainty (TPU Index) by counting the frequency of joint occurrences of trade policy and uncertainty terms across major newspapers. The TPU index spikes initially in the 1970s following the Nixon and Ford "shocks" to U.S. trade policy. There are additional increases in TPU resulting from trade tensions with Japan in the 1980s and around the NAFTA negotiations in the mid-1990s. TPU reaches unprecedented levels beginning after the 2016 U.S. Presidential Election and spikes several times in response to heightened tensions between the U.S. and its trading partners, notably China and Mexico.
The paper "The Economic Effects of Trade Policy Uncertainty" constructs three measures of TPU based on newspaper coverage, firms’ earnings conference calls, and aggregate data on tariff rates. The paper documents that increases in TPU reduce investment and activity using both firm-level and aggregate data. The paper interprets the empirical results through the lens of a two-country general equilibrium model with nominal rigidities and firms’ export participation decisions. In the model as in the data, news and increased uncertainty about higher future tariffs reduce investment and activity.
Cite the paper as:
Caldara, Dario, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo (2020), "The Economic Effects of Trade Policy Uncertainty,"
Journal of Monetary Economics, 109, pp.38-59.
A technical appendix for the paper and
the latest presentation slides
are available.
The FEDS Note "Does Trade Policy Uncertainty Affect Global Economic Activity?" uses evidence on the joint movements in TPU, industrial production, and other macroeconomic and financial variables in order to provide an estimate of the effects of the 2018-2019 spikes in TPU on U.S. GDP, as well as GDP in advanced foreign economies (AFEs) and emerging market economies (EMEs).
Cite the FEDS Note as: Caldara, Dario, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo, "Does Trade Policy Uncertainty Affect Global Economic Activity?," September 4 2019.
Description
The TPU index is based on automated text searches of the electronic archives of seven newspapers: Boston Globe, Chicago Tribune, Guardian, Los Angeles Times, New York Times, Wall Street Journal, and Washington Post. The measure is calculated by counting the monthly frequency of articles discussing trade policy uncertainty (as a share of the total number of news articles) for each newspaper. The index is then normalized to a value of
0 for a one percent article share. The TPU Index starts in 1960.
Data
Download our aggregate TPU data here
[last update: November 1, 2024 ].
Download the firm-level TPU data ("tpuashare") used in the JME paper here.
Download the replication codes for the firm-level analysis in the JME paper here.
These data can be used freely with attribution to the authors, the paper, and the website.
Source: Caldara, Dario, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo (2020), "The Economic Effects of Trade Policy Uncertainty," Journal of Monetary Economics, 109, pp.38-59.
Code
Model replication codes
here [last update: November 3, 2019].
These data can be used freely with attribution to the authors, the paper, and the website.
The latest version of the paper can be found
here
Citations
(1) Monetary Policy Report to Congress (July 5, 2019)
(2) Wall Street Journal (September 5, 2019)
(3) Reuters (September 5, 2019)
(4) Bloomberg (September 5, 2019)
(5) Washington Post (September 6, 2019)
(6) Politico (September 6, 2019)
(7) Arirang News (September 6, 2019)
(8) Wall Street Journal (Editorial) (September 6, 2019)
(9) Deutsche Bank (September 6, 2019)
(10) Business Times (September 6, 2019)
(11) Market Watch (September 9, 2019)
(12) Wall Street Window (September 10, 2019)
(13) Foreign Affairs (September 10, 2019)
(14) Forbes (September 10, 2019)
(15) Econbrowser (September 13, 2019)
(16) Financial Times (September 15, 2019)
(17) Forbes (September 22, 2019)
(18) Il Sole 24 Ore (Italian) (September 27, 2019)
(19) Seattle Times (September 29, 2019)
(20) New York Times (October 8, 2019)
(21) PBS News Hour (October 11, 2019)
