Essays on International Trade and Uncertainty

Abstract

This dissertation consists of three chapters, focusing on the role of uncertainty in international trade. In the first chapter, I review recent papers that study the effects of trade policy uncertainty, and a recent trend that studies supply-chain uncertainty in international trade motivated by the COVID-19 pandemic. I also provide a brief discussion on measuring the firms' level of diversification in imported inputs during the pandemic. In the second chapter, I use a model that accounts for substitution of the same imported good from different countries and estimate U.S. firms' belief on the approval rate of antidumping petitions in 1990-2015. More specifically, I split antidumping petitions into the approved group and the rejected group. Similar to the studies in trade policy uncertainty, the existence of the antidumping law acts as a source of uncertainty for U.S. importing firms. If another U.S. firm files an antidumping petition against one of their suppliers, their supply chain is disrupted. The antidumping petition is a nice subject to study trade policy uncertainty, because the timeline of the investigation is clear and the duty amount is also specified in the preliminary decision. I find that, on average, U.S. firms believe that antidumping petitions have a 72\% chance of getting approved for the finally approved cases, while have a 68\% chance of getting approved for the finally rejected cases. These two numbers are close, indicating that firms do not have a good idea on whether an antidumping petition would get approved or rejected. In the third chapter, I utilize information from Bill of Lading data to study firm-level input changes in the presence of the COVID-19 pandemic. More specifically, I am interested in studying why importing firms import more varieties, as defined by the country-good pair, on average during the pandemic. On average, a U.S. manufacturing firm increases its number of imported varieties from 8.72 in 2019 to 13.53 in 2021. I find that the biggest contributor to the increase in imported varieties is the increasing demand in manufactured goods. The theory is that since consumers have limited access to services due to COVID-related lockdowns, they attribute more of their expenses towards goods. I also find a total increase of 7\% in imported input prices and a total increase of 5\% in domestic input prices.