LAUSR

Abstract The paper by Caldara et al. develops new measures of trade policy uncertainty (TPU) that are associated with reduced economic activity at the micro and macro levels, and uses a DSGE model with sticky prices and sunk exporting costs to illustrate the economic forces driving these results. This discussion provides two forms of additional context for the authors’ findings. First, I shed light on the reasons that firms care about TPU by linking the authors’ dataset to the U.S. input-output accounts. Second, I use a simple model of price-setting under nominal rigidities to explore the sensitivity of the authors’ quantitative results to some of their modeling assumptions.