Self-Harming Trade Policy? Protectionism and Production Networks

Using monthly data on temporary trade barriers (TTBs), we estimate the dynamic employment effects of protectionism through vertical production linkages. First, exploiting high-frequency and TTB procedural details, identify policy shocks exogenous to economic fundamentals. We then use input-output tables construct measures affecting downstream producers. Finally, panel local projections using identified shocks. Protectionism has small insignificant beneficial in protected industries. The industries are negative, sizable, significant. decline follows an increase intermediate input final goods prices a stock market returns. (JEL E24, F13, F14, F16, G14, L14)