Staff Reports
Uncertainty about Trade Policy Uncertainty
Number 919
March 2020

JEL classification: C11, C22

Authors: Gianluca Benigno and Jan J. J. Groen

We revisit in this note the macroeconomic impact of the recent rise in trade policy uncertainty. As in the literature, we do find that high trade policy uncertainty can adversely impact domestic and foreign economic activity. In addition, we identify an alternative business sentiment channel that is separate and distinct from the impact of trade policy uncertainty, which provides a complementary explanation of the recent developments in the U.S. and global economic activities. This sentiment channel also implies that subsiding trade policy uncertainty does not necessarily result in a recovery of the manufacturing sector and investment spending as long as business sentiment remains negative.

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Author Disclosure Statement(s)
Gianluca Benigno

(1) Every submitted article should state the sources of financial support for the particular research it describes. If none, that fact should be stated.

I have not received any financial support for this research.

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Jan J. J. Groen
The author declares that he has no relevant or material financial interests that relate to the research described in this paper. Prior to circulation, this paper was reviewed in accordance with the Federal Reserve Bank of New York review policy, available at

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