Trade and Investment under Policy Uncertainty: Theory and Firm Evidence
Kyle Handley and Nuno Limão ,
4
( 7 )
American Economic Journal: Economic Policy
189-222
November
2015
tpu_final.pdf622.65 KB
Abstract

Using a dynamic, heterogeneous firms model with sunk costs of exporting we show that: (i) investment and entry into export markets is reduced when trade policy is uncertain and (ii) credible preferential trade agreements (PTAs) increase trade even if applied trade barriers are currently low.

Links to Researchers