ANALYZING THE EFFECT OF WORLD TRADE ORGANIZATION DISPUTES ON SPECIFIC MARKETS AND INDUSTRIES
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Date
2024-05
Authors
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Publisher
The Ohio State University
Abstract
How effective are World Trade Organization (WTO) dispute settlements? This paper presupposes that the WTO, in its current form, is not effective enough to be regularly used when trade disputes occur between nations. For urgent matters, it is often more favorable for nations to implement sanctions or tariffs which promptly address trade disputes. Case in point is the use of U.S. tariffs imposed on China for dumping low-cost goods in the U.S. or how NATO countries are now dealing with Russia regarding gas exports. While the use of tariffs and sanctions have researched results, evaluating the impact of WTO dispute settlements measured using stock market price levels remains relatively unexplored. This paper uses an event study model to find that industry stock prices for both complainants (member countries who initialize a case) and respondents (member countries who are facing a judgement from WTO judges) do not receive any significant effects from WTO policy during the entire period that the dispute takes place. Moreover, these findings are reinforced after performing two variations of a Bayesian hierarchical model. The results will contribute to future research on the impact of trade tensions between nations and the challenges facing the WTO’s dispute settlement system.
Description
Department of Economics, 2023 Undergraduate Poster Forum award
Keywords
WTO, Event study model, Bayesian hierarchical model, Financial economics, Stock market, Economics