Economic Policy Uncertainty, Firms Behavior and Trade

Fosu, Felix Atta

Economic Policy Uncertainty, Firms Behavior and Trade

dc.contributor.advisor	Tombe, Trevor
dc.contributor.author	Fosu, Felix Atta
dc.contributor.committeemember	Beaulieu, Eugene
dc.contributor.committeemember	Tsuyuhara, Kunio
dc.date	2023-11
dc.date.accessioned	2023-07-17T18:16:07Z
dc.date.available	2023-07-17T18:16:07Z
dc.date.issued	2023-07
dc.description.abstract	Economic policy uncertainty has increased sharply, especially following the 2008 financial crisis. Policy uncertainty arises from a lack of clarity and predictability about the future course of policies. Consequently, a forum has emerged to identify and discuss its potential effect on economic activities. My thesis offers insights into some of these critical issues, including the significance of the impact of policy uncertainty on trade and investment, the relative impact of policy uncertainty on within-firm and between-firm trade. Also, it identifies the features of industries which amplify the investment effects of policy uncertainty, as well as the institutional mechanisms that can mitigate these effects. Contributing to these policy-relevant discussion expands the usefulness of my research beyond the academic circles to policy making fronts. The general insight from my research is that rising policy uncertainty will not only reduce the volume of trade but alter the organizational structure of multinational firms and hence, how trade is organized. Moreover, industries with competitive input markets and sunk investment costs respond significantly to changes in policy uncertainty. Further, my research maintains that international dispute resolution mechanisms such as the WTO can significantly reduce or eliminate some of the adverse effects of policy uncertainty on economic activities. First, I examine how policy uncertainty affects the organizational structure of multinational firms and the organization of trade. Using US industry data and the difference-in-differences method, I find that higher policy uncertainty reduces the share of trade that occurs between-firm. Second, I test a conjecture that the effect of policy uncertainty on within firm trade and between firm trade increases in the thickness of industry's input market. Using US industry-level trade data and difference-in-difference technique, I find that the differential effect of policy uncertainty increases in the thickness of the input market. Third, I consider the WTO, Free Trade Agreements and Diplomatic Exchanges as international dispute resolution mechanisms and examine their impacts on trade between country pairs that have a history of war. Using bilateral trade flow data, I find that international dispute resolution mechanisms can significantly to the trade growth among nations with a history of war.
dc.identifier.citation	Fosu, F. A. (2023). Economic policy uncertainty, firms behavior and trade (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca.
dc.identifier.uri	https://hdl.handle.net/1880/116752
dc.identifier.uri	https://dx.doi.org/10.11575/PRISM/41594
dc.language.iso	en
dc.publisher.faculty	Graduate Studies
dc.publisher.institution	University of Calgary
dc.rights	University of Calgary graduate students retain copyright ownership and moral rights for their thesis. You may use this material in any way that is permitted by the Copyright Act or through licensing that has been assigned to the document. For uses that are not allowable under copyright legislation or licensing, you are required to seek permission.
dc.subject	Policy Uncertainty
dc.subject	Investment
dc.subject	Trade
dc.subject.classification	Education--Social Sciences
dc.title	Economic Policy Uncertainty, Firms Behavior and Trade
dc.type	doctoral thesis
thesis.degree.discipline	Economics
thesis.degree.grantor	University of Calgary
thesis.degree.name	Doctor of Philosophy (PhD)
ucalgary.thesis.accesssetbystudent	I do not require a thesis withhold – my thesis will have open access and can be viewed and downloaded publicly as soon as possible.