The Effects of the Uruguay Round: Empirical Evidence from U.s. Industry

This article uses an e ent study to e aluate the anticipated results of the Uruguay Round on U.S. industry. Economists commonly use computable general equilibrium ( ) CGE models to predict the net economic efficiency effects of trade agreements. The e ent study method represents a complementary approach that relies on stock price mo ements to assess how in estors predict that an e ent, in this case the conclusion of the Uruguay Round, will affect industry profitability. The empirical estimates ( ) indicate that U.S. industries with comparati e ad antage disad antage experience ( ) ( ) positi e negati e stock price reactions, reflecting an increase a decrease in the ( ) industry trade and in estment opportunities as well as an increased decreased return to existing tangible and intangible assets. For the market as a whole, the ariation in stock prices does not differ significantly from zero, and the economic magnitude of industry gains and losses is small. These results are consistent with most CGE assessments and with the skeptical attitude that the real impact of the Ž . Uruguay Round Agreement remains uncertain. JEL F13, F2