# **Table 6.** **_GVCs and the World Trade Uncertainty (WTU) index_**

|Coefficient of Log (Trade Uncertainty index+1)|contempo|raneous||lagged(2|months)||
|---|---|---|---|---|---|---|
||(1a)||(1b)|(2a)||(2b)|
||GVC‐related<br>non GVC‐related|<br>GVC‐related|non GVC‐related|GVC‐related<br>non GVC‐related|<br>GVC‐related|non GVC‐related|
|Average|‐0.00122<br>0.0178*<br>(0.0118)<br>(0.00926)|||0.00755<br>0.0253**<br>(0.0118)<br>(0.00966)|||
|Australia (AUS)||0.0145**<br>(0.00676)|‐0.00539<br>(0.00676)||0.0197***<br>(0.00657)|‐0.000166<br>(0.00657)|
|Brazil (BRA)||0.0132**|0.0754***||0.0191***|0.0818***|
|||(0.00581)|(0.00581)||(0.00500)|(0.00500)|
|Canada (CAN)||0.0192***|0.0159**||0.0277***|0.0241***|
|||(0.00626)|(0.00626)||(0.00553)|(0.00553)|
|Chile (CHL)||0.0179*|0.0170*||0.0393***|0.0191*|
|||(0.00886)|(0.00886)||(0.0105)|(0.0105)|
|China (CHN)||‐0.234***|‐0.0159**||‐0.232***|‐0.0144*|
|||(0.00775)|(0.00775)||(0.00783)|(0.00783)|
|Colombia (COL)||0.00139|0.0300***||0.0170|0.0412***|
|||(0.00917)|(0.00917)||(0.0123)|(0.0123)|
|Spain (ESP)||0.000280<br>(0.0243)|‐0.00499<br>(0.0243)||||
|France (FRA)||0.0200**|0.00427||0.0174*|0.00164|
|||(0.00971)|(0.00971)||(0.00951)|(0.00951)|
|United Kingdom (GBR)||‐0.0394***|‐0.0207**||‐0.0126|‐0.00350|
|||(0.00958)|(0.00958)||(0.0106)|(0.0106)|
|Greece (GRC)||‐0.0528***|‐0.0311***||‐0.0319***|‐0.0267**|
|||(0.00884)|(0.00884)||(0.0105)|(0.0105)|
|Ireland (IRL)||‐0.0650***|0.0373***||0.0243*|0.0987***|
|||(0.00973)|(0.00973)||(0.0128)|(0.0128)|
|Japan (JPN)||0.0678***|0.0348***||0.0630***|0.0300**|
|||(0.0114)|(0.0114)||(0.0117)|(0.0117)|
|Mexico (MEX)||0.0187***|0.0150***||0.0253***|0.0202***|
|||(0.00424)|(0.00424)||(0.00417)|(0.00417)|
|Netherlands (NLD)||‐0.000512<br>|0.00524<br>||0.00361<br>|0.0120<br>|
|||(0.00627)|(0.00627)||(0.00824)|(0.00824)|
|Russian Federation (RUS)||‐0.0403***|0.0463***||‐0.0439***|0.0426***|
|||(0.00925)|(0.00925)||(0.00968)|(0.00968)|
|United States (USA)||0.00956*|‐0.0143**||0.0120|‐0.00219|
|||(0.00563)|(0.00563)||(0.00730)|(0.00730)|
|Growth in Real GDP|1.800***|1.|795***|1.794***|1|.780***|
||(0.221)|(|0.230)|(0.220)||(0.232)|
|Growth in Real effective exchange rate|0.242***|0.|237***|0.244***|0|.240***|
||(0.0683)|(0|.0724)|(0.0682)|(|0.0712)|
|Growth in tariff rate|0.0200|0|.0125|0.0185||0.0114|
||(0.0298)|(0|.0315)|(0.0293)|(|0.0313)|
|Constant|‐0.0190|‐|0.0212|‐0.0194|‐|0.0206|
||(0.0135)|(0|.0143)|(0.0135)|(|0.0143)|
|Country fixed effects|Yes||Yes|Yes||Yes|
|Year fixed effects|Yes||Yes|Yes||Yes|
|R‐squared|0.562||0.581|0.563||0.582|
|Number of observations|906||906|906||906|

_Sources_ : International Monetary Fund World Economic Outlook, World Bank Global Economic Monitor, International Monetary Fund International Financial Statistics, World Trade Organization, World Input Output Database (WIOD), <u>www.PolicyUncertainty.com, Ahir et al. (2019), and authors’ calculations. See Table 1 for details. Notes: Heteroscedasticity-</u> robust standard errors corrected for clustering at country level. * p<0.10; ** p<0.05; *** p<0.01. Results in grey indicate that difference between coefficients of GVC-related and non-GVC related indicators is not statistically different from zero. Panel covers period 1995-2018. Growth indicators are computed as log-differences.

# **6. Conclusion**

Trade growth has been subdued since the global financial crisis; the evidence presented in this paper suggests that the increase in policy uncertainty in recent years may have been an important overlooked factor contributing to the slow growth of world trade. Specifically, we use new data on economic policy uncertainty for a sample of 18 countries and 24 years from Baker et al. (2016) and find a statistically significant relationship between this measure of policy uncertainty and growth in trade, including trade linked to GVCs.

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