Cassidy Diaz
Assistant Editor
Ryan Lee, associate professor of economics, shared his research on “The Effect of Trade Agreements on Trade Margins: Firm-Level Evidence from Colombia,” for the La Verne Academy lecture series Tuesday in the Quay Davis Executive Board Room.
Lee’s presentation focused on two specific questions regarding trade agreements: Does lowering tariffs make it easier to export as a firm? And does production in trade policy uncertainty make it easier to export – specifically looking at data and key points from Colombia?
“Theoretically it’s an issue and we should care if tariffs restrict trade, tariffs then decrease money,” Lee said. “What we want to do then is try to measure what are the gains from trade.”
Lee’s paper is mainly about trade policy uncertainty and how tariffs will remain unchanged unless there is an agreement.
“So the idea is that uncertainty over future tariffs matters a lot for trade,” Lee said. “We have this generalized system of preferences being an example of trade policy uncertainty.”
The goal in this research is how to find what the average effect of tariff reductions and reductions in trade policy uncertainty is going to be.
“Then there is the math and how you calculate it in a very simple example that would get this nice result of regression,” Lee said. “With two periods and two groups the answer you want is exactly what you get in your regression coefficient.”
Lee approached his presentation by analyzing the result of removing the trade policy uncertainty by using firm-level data and trade margins.
“We want our statistical significance to be coming from the fact that we measured what we wanted to measure,” Lee said. “Then feel faithfully say trade agreements increase trade agreements we don’t want our coefficient to be measuring stuff that we don’t want to.”
Lee said that trade agreements do increase trade. To do so is for researchers to use newer estimation methods to accurately find the underlying parameter.
Interested in the firm-level research, Louise Kelly, professor of management, expressed how the decisions are made in the process.
“What’s different about the firms and how does that create competitive advantage,” Kelly said.
Lee explained the big concern is matching up the firm data with quality firm financials from Colombia in this case.
“You can link some firms and with samples you want the nicest,” Lee said. “I looked into going down that route and realized the sample gets crushed.”
Lee discussed the proper way to test situations where different effects are applied over time and where those effects are going to have different impacts on different subjects.
“I learned a few things about what trade economists call the difference between generalized agreements versus fair trade agreements,” William Hippler, associate professor of finance, said. “This is not my area but from what I understand his findings are not particularly surprising like the pre-trade agreements that improve trade.”
Lee explained that as a trade economist and having the trade data the next step is what can he do with it. What questions can be asked after sifting through the data the stuff that he already knows on trade agreements.
“With the trade policy uncertainty it’s just made my life as a trade economist easier to justify why the topic matters,” Lee said.
Cassidy Diaz can be reached at cassidy.diazgomez@laverne.edu.
Cassidy Diaz is a senior journalism major with a concentration in print and online journalism. She is also news editor for the Campus Times, and previously served as an assistant editor and a staff writer.
Antonio Ceniceros is a senior photography major and a staff photographer for the Campus Times and La Verne Magazine. He is also the lead photographer and social media manager for the University of La Verne’s football team, and currently specializes in sports, concert, and fashion photography. You can find his work on Instagram at @flicksbycinco..
