Scientific Beta

Financial Investigator: "Historically, there has been a long-term trend towards free international trade. But not without important reversals towards protectionism. Shifts in trade policy influence the structure of the economy, creating winners and losers. Trade policy clearly influences the financial performance of firms. Moreover, shifts in trade policy will have heterogeneous effects across such businesses."

Financial Investigator 08/08/2023

 

By Giovanni Bruno, Felix Goltz and Ben Luyten, respectively Senior Quantitative Analyst, Research Director, and Senior Research Analyst at Scientific Beta

"(...) Historically, there has been a long-term trend towards free international trade. But not without important reversals towards protectionism. Shifts in trade policy influence the structure of the economy, creating winners and losers. Trade policy clearly influences the financial performance of firms. Moreover, shifts in trade policy will have heterogeneous effects across such businesses. Some may benefit from a more globalised market via reduced input costs or more export opportunities, while others may benefit from the introduction of protectionist policies via a reduction in foreign competition. A measure that captures the impact of shifts in trade policy on firms is therefore a useful tool for financial market participants and researchers in finance or economics alike. (...)".

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