Nothing like a 100% tariff on (branded?) pharma to push up EPU-Trade
Figure 1: EPU-trade category (left scale, blue), Trade Policy Uncertainty Index (red, right scale). Source: policyuncertainty.com, matteoiacoviello.com.
2 thoughts on “Trade Policy Uncertainty”
AS
I have this prejudice that international trade helps to minimize inflation in the USA.
I thought from a VAR I could easily find Granger Causation from the relationship of the dlog(ratio of goods imports) to dlog(CPI), where ratio of goods imports is the ratio of goods imports to the GDP. Since 1970 the ratio of goods imports to GDP has increased from about 3.2% to 12.6%.
Granger Causation seems to run from the change in inflation to the change in the ratio.
I have to be missing something.
Perhaps you are missing a variable. If, for instance, the cost of production has risen for a major trade partner, including that variable could clear up the direction of causation:
I have this prejudice that international trade helps to minimize inflation in the USA.
I thought from a VAR I could easily find Granger Causation from the relationship of the dlog(ratio of goods imports) to dlog(CPI), where ratio of goods imports is the ratio of goods imports to the GDP. Since 1970 the ratio of goods imports to GDP has increased from about 3.2% to 12.6%.
Granger Causation seems to run from the change in inflation to the change in the ratio.
I have to be missing something.
Perhaps you are missing a variable. If, for instance, the cost of production has risen for a major trade partner, including that variable could clear up the direction of causation:
https://www.linkedin.com/pulse/evolution-manufacturing-unit-labor-costs-asia-talentdbyworldref-xtcqc