Input Tariff Phase-Out and Firm Investment Dynamics—Evidence from China's WTO Accession
We investigate how the commitments of trade agreement on bound rates of future tariff on imported inputs affect firm investment decisions theoretically and empirically.Theoretical analysis shows that the unanticipated tariff cut encourages the investment of downstream firms,while the anticipated tar-iff cut depresses firms'current investment but expands their future investment,and it may not have such effects on the intermediate inputs.The empirical analysis based on China's WTO accession provides sup-porting evidence.This study expands the scope of research on the news shocks to the field of trade policy research in China for the first time.
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