Research
In Progress
4 papersTrade Policy Ambiguity
This paper studies how Knightian uncertainty about the distribution of future trade policies affects current trade flows using a dynamic trade model with a sunk cost of exporting. Qualitatively, trade-policy ambiguity reduces export participation in a similar manner to standard trade-policy risk, but also increases sensitivity to tariff bounds, decreases sensitivity to the likelihood of a tariff increase, and can either increase or decrease sensitivity to tariff persistence. Quantitatively, ambiguity dampens the response of trade to persistent reforms and strengthens the response to transitory reforms.
@techreport{NBERw34408,
title = "Trade Policy Ambiguity",
author = "Steinberg,
Joseph B",
institution = "National Bureau of Economic Research",
type = "Working Paper",
number = "34408",
year = "2025",
doi = {10.3386/w34408},
URL = "http://www.nber.org/papers/w34408"
}
Tariffs, Manufacturing Employment, and Supply Chains
I use a dynamic general-equilibrium model with supply-chain adjustment frictions to study the effects of tariffs on manufacturing employment. The model has four distinct manufacturing sectors: upstream goods with high trade elasticities (``oil''); upstream goods with low trade elasticities (``steel''); downstream goods with high trade elasticities (``toys''); and downstream goods with low trade elasticities (``cars''). I find that tariffs can increase overall manufacturing employment in the long run, but are likely to reduce it in the short run, and cause more reallocation of workers across these individual sectors than overall employment growth.
@techreport{NBERw34236,
title = "Tariffs,
Manufacturing Employment,
and Supply Chains",
author = "Steinberg,
Joseph B",
institution = "National Bureau of Economic Research",
type = "Working Paper",
series = "Working Paper Series",
number = "34236",
year = "2025",
doi = {10.3386/w34236},
URL = "http://www.nber.org/papers/w34236"
}
Recovering Credible Trade Elasticities from Incredible Trade Reforms
We recover the elasticity of trade in response to an unanticipated, once-and-for-all tariff reform by estimating a dynamic heterogeneous-firm model on data from anticipated, uncertain reforms. Using 1974--2017 U.S. import and tariff data, we show that within-schedule tariff changes are frequent and transitory, while transitions across schedules are rare, persistent, and elicit far larger trade responses. We calibrate the model to U.S. trade with China and Vietnam---the countries that experienced the most substantial and persistent tariff reductions---and jointly estimate the parameters governing tariff expectations and firm-level adjustment dynamics. Simulating an unanticipated, once-and-for-all reform yields a short-run elasticity of about three and a long-run elasticity of about 15. Our results imply that reduced-form estimates based on typical transitory tariff variation substantially understate the long-run effects of permanent liberalizations.
@techreport{NBERw33568,
title = "Recovering Credible Trade Elasticities from Incredible Trade Reforms",
author = "Alessandria,
George A and Khan,
Shafaat Yar and Khederlarian,
Armen and Ruhl,
Kim J and Steinberg,
Joseph B",
institution = "National Bureau of Economic Research",
type = "Working Paper",
series = "Working Paper Series",
number = "33568",
year = "2025",
doi = {10.3386/w33568},
URL = "http://www.nber.org/papers/w33568"
}
Global Ripple Effects of Corporate Tax Reforms
We study international spillovers of corporate tax reforms in a fragmented global tax regime. Using firm-level evidence on the 2017 U.S. Tax Cuts and Jobs Act (TCJA) and a quantitative general-equilibrium model, we illustrate how multinational enterprises (MNEs) propagate local policy shocks throughout the global economy. Our framework emphasizes two key intrinsic properties of intangible capital: non-rivalry and mobile ownership. We find the TCJA generated positive outward spillovers: First, it boosted U.S. MNEs’ intangible investment, raising their foreign subsidiaries' output. Second, it increased tangible investment of foreign MNEs' U.S. subsidiaries, incentivizing them to expand intangible investment at home. Conversely, a Global Minimum Tax (GMT) implemented by the rest of the world generates negative inward spillovers for the United States, even if U.S.-parented MNEs are exempt. These findings illustrate that there is no such thing as a purely domestic corporate tax policy.
@techreport{NBERw34627,
title = "Global Ripple Effects of Corporate Tax Reforms",
author = "Dyrda,
Sebastian and Hong,
Guangbin and Sajid,
Muhammad Ali and Steinberg,
Joseph B",
institution = "National Bureau of Economic Research",
type = "Working Paper",
series = "Working Paper Series",
number = "34627",
year = "2026",
doi = {10.3386/w34627}
}
Journal Articles
15 articlesTrade War and Peace: U.S.-China Trade and Tariff Risk from 2015–2050
Coverage in The Economist
We model trade policy as a Markov process. Using a dynamic exporting model, we estimate how expectations about U.S. tariffs on China have changed around the U.S.-China trade war. We find (i) no increase in the likelihood of a trade war before 2018; (ii) the trade war was initially expected to end quickly but its expected duration grew substantially after 2020; and (iii) the trade war reduced the likelihood that China would face Non-Normal Trade Relations tariffs in the future. Our findings imply the expected mean future U.S. tariff on China rose more under President Biden than under President Trump.
@article{ALESSANDRIA2025104066,
title = {Trade war and peace: U.S.-China trade and tariff risk from 2015–2050},
journal = {Journal of International Economics},
volume={155},
pages = {104066},
year = {2025},
doi = {https://doi.org/10.1016/j.jinteco.2025.104066},
url = {https://www.sciencedirect.com/science/article/pii/S0022199625000224},
author = {George Alessandria and Shafaat Yar Khan and Armen Khederlarian and Kim J. Ruhl and Joseph B. Steinberg}
}
Trade-Policy Dynamics: Evidence from 60 years of U.S.-China Trade
We study China’s export growth to the United States from 1950--2008, using a structural model to disentangle the effects of past tariff changes from the effects of changes in expectations of future tariffs. We find the effects of China’s 1980 Normal Trade Relations (NTR) grant lasted past its 2001 accession to the World Trade Organization (WTO), and the likelihood of losing NTR status decreased significantly during 1986--1992 but changed little thereafter. U.S. manufacturing employment trends support our findings: industries more exposed to the 1980 reform have shed workers steadily since then without acceleration around China's WTO accession.
@article{doi:10.1086/733420,
title = {{Trade-Policy Dynamics: Evidence from 60 Years of U.S.-China Trade}},
author = "Alessandria, George A and Khan, Shafaat Y and Khederlarian, Armen and Ruhl, Kim J and Steinberg, Joseph B",
journal = {Journal of Political Economy},
year = "2025",
volume="133",
pages="713-749",
number="3",
doi = {10.1086/733420},
}
Economic Benefit of Implementation of Pediatric Transnasal Endoscopy in Eosinophilic Esophagitis
Intro: Transnasal endoscopy (TNE) is a diagnostic alternative to esophagogastroduodenoscopy (EGD) for management of
eosinophilic esophagitis (EoE). The combined time of pre-operative, operative and recovery stage for EGD can be
cumbersome for families, and may impact low-income families disproportionately. The aim of our study is to quantify
the economic impact of TNE compared to EGD on the patient/family, provider and healthcare system.
Methods: We queried the medical record for about 100 TNEs and 100 EGDs at a single center for EoE surveillance and extracted the following data: gender, age, race/ethnicity, insurance, and visit time. TriNetX was used to obtain a nationwide sample of patients undergoing EoE surveillance endoscopy. TriNetX identified a mean of 214.2 EGDs for EoE per month (2570 EGDs annually). This data represents approximately 1/3 of all US patients, therefore this was scaled by a factor of 3.We calculated the opportunity cost (OC) defined as the loss of potential gain from other alternatives, such as work, for the visit time for EGD. Personal OC was estimated as a function of time and mean value per hour to US workers. Systemic OC was based on prior work estimating nationwide OR OC.
Results: Mean visit time for EGD was 185.1+/-39.5 vs 53.7 +/-17.6 minutes for TNE. Table 1 depicts the economic benefits annually based on procedural distribution between EGD and TNE. With a 100% EGD distribution, the OC per patient is $58.62 and systemic OC is $3,014. With a 50/50 distribution of EGD/TNE, the OC per patient is $37.82 and systemic OC is $1,507. Estimating a nationwide projection, a 50/50 EGD/TNE distribution would save patients $200,000 and the system $15 million compared to 100% EGD.
Discussion: This is the first study to evaluate the economic impact to patients and healthcare system of TNE compared to EGD. We demonstrate a substantial reduction in OC for patients and value for healthcare systems. This suggests the ability to dramatically decrease the burden on families, as well as the cost of EoE care on the system with TNE utilization.
Methods: We queried the medical record for about 100 TNEs and 100 EGDs at a single center for EoE surveillance and extracted the following data: gender, age, race/ethnicity, insurance, and visit time. TriNetX was used to obtain a nationwide sample of patients undergoing EoE surveillance endoscopy. TriNetX identified a mean of 214.2 EGDs for EoE per month (2570 EGDs annually). This data represents approximately 1/3 of all US patients, therefore this was scaled by a factor of 3.We calculated the opportunity cost (OC) defined as the loss of potential gain from other alternatives, such as work, for the visit time for EGD. Personal OC was estimated as a function of time and mean value per hour to US workers. Systemic OC was based on prior work estimating nationwide OR OC.
Results: Mean visit time for EGD was 185.1+/-39.5 vs 53.7 +/-17.6 minutes for TNE. Table 1 depicts the economic benefits annually based on procedural distribution between EGD and TNE. With a 100% EGD distribution, the OC per patient is $58.62 and systemic OC is $3,014. With a 50/50 distribution of EGD/TNE, the OC per patient is $37.82 and systemic OC is $1,507. Estimating a nationwide projection, a 50/50 EGD/TNE distribution would save patients $200,000 and the system $15 million compared to 100% EGD.
Discussion: This is the first study to evaluate the economic impact to patients and healthcare system of TNE compared to EGD. We demonstrate a substantial reduction in OC for patients and value for healthcare systems. This suggests the ability to dramatically decrease the burden on families, as well as the cost of EoE care on the system with TNE utilization.
@article{JOSEPH20251662,
title = {Economic Benefit of Implementation of Pediatric Transnasal Endoscopy in Eosinophilic Esophagitis},
journal = {Clinical Gastroenterology and Hepatology},
volume = {23},
number = {9},
pages = {1662-1664.e2},
year = {2025},
issn = {1542-3565},
doi = {https://doi.org/10.1016/j.cgh.2025.01.011},
url = {https://www.sciencedirect.com/science/article/pii/S1542356525001533},
author = {Michael Joseph and Joseph Steinberg and Jacob A. Mark and Thomas Wallach and Nathalie Nguyen}
}
A Macroeconomic Perspective on Taxing Multinational Enterprises
We develop a general-equilibrium model to study the macroeconomic consequences of international profit shifting by multinational enterprises (MNEs). In our model, MNEs shift profits by exploiting intangible capital transfer pricing rules, which makes intangible investment more attractive and leads to higher output at home and abroad. We use the model to quantify the effects of two reforms proposed by the OECD: (i) reallocating MNEs’ profit tax bases to the countries where they sell their products; and (ii) a minimum global corporate income tax. Both reforms would reduce profit shifting substantially, but (i) would reduce global output whereas (ii) would have little macroeconomic impact. The reforms’ distributional implications would also be important. In high-tax countries, tax revenues would increase more than output declines, raising gross national income and enabling redistribution that could offset lower wages. In contrast, output and tax revenues would both drop in low-tax countries, significantly reducing national income.
@article{DYRDA2024104022,
title = {A macroeconomic perspective on taxing multinational enterprises},
journal = {Journal of International Economics},
volume = {152},
pages = {104022},
year = {2024},
doi = {https://doi.org/10.1016/j.jinteco.2024.104022},
url = {https://www.sciencedirect.com/science/article/pii/S0022199624001491},
author = {Sebastian Dyrda and Guangbin Hong and Joseph B. Steinberg}
}
Tax Evasion and Capital Taxation
Wealth inequality has prompted calls for higher taxes on capital income and wealth, but also concerns that rich households would respond by concealing their assets offshore. We use a general equilibrium model to study how taxing capital more heavily would affect offshore tax evasion and how this would affect the broader economy. Without evasion, tax revenue could be increased dramatically, inequality could be reduced, and widespread welfare gains could be achieved. After accounting for evasion, however, tax revenue would rise marginally or even fall, inequality would increase, and widespread welfare losses would result.
@article{doi:10.1086/729066,
author = {Rotberg, Shahar and Steinberg, Joseph},
title = {Tax Evasion and Capital Taxation},
journal = {Journal of Political Economy},
volume={132},
number={7},
pages={2179-2530},
year={2024},
doi = {10.1086/729066},
URL = {https://doi.org/10.1086/729066}
}
Mortgage Interest Deductions? Not a Bad Idea After All
Mortgage interest deductions and other homeownership subsidies are widely believed to be harmful because they redistribute resources from lower-income renters to higher-income homeowners. We argue that renters actually benefit from these policies in general equilibrium for two reasons. First, the rental supply curve is relatively inelastic, which means that rents fall when these policies reduce rental demand. Second, many renters spend most of their income on housing, and these renters gain substantially from rent decreases. We calibrate a quantitative model to match empirical evidence on these factors and show they are strong enough that subsidizing homeownership actually increases welfare.`
@article{ROTBERG2024103551,
title = {Mortgage interest deductions? Not a bad idea after all},
journal = {Journal of Monetary Economics},
year = {2024},
volume=144,
pages={103551},
doi = {https://doi.org/10.1016/j.jmoneco.2024.01.004},
url = {https://www.sciencedirect.com/science/article/pii/S0304393224000047},
author = {Shahar Rotberg and Joseph B. Steinberg}
}
Optimal Taxation of Multinational Enterprises: A Ramsey Approach
CRNYU conference volume
What is the optimal design of the international corporate tax system? We revisit this classic question in a multi-country general equilibrium model that incorporates three key features of the modern globalized economy: multinational production; intangible capital; and international profit shifting. Our model’s competitive equilibrium is inefficient due to an externality that arises from international spillovers in intangible investment. In the absence of profit shifting, there is little, if anything, a Ramsey planner can do with corporate income taxes to improve the allocation of intangible investment across countries. However, profit shifting allows the planner to use corporate income taxes to internalize the externality and achieve an efficient allocation of intangible investment. To quantitatively investigate the properties of the Ramsey planner’s optimal policy in a more realistic setting, we extend our model to an environment with firm heterogeneity and selection into multinational production. Without spillovers, it would be optimal to shut down profit shifting as much as possible. With spillovers, it would be optimal to allow MNEs to continue to shift profits, and if the planner is restricted to Pareto-improving policies, it would be optimal to allow even more profit shifting than under the status quo.
@article{DYRDA202474,
title = {Optimal taxation of multinational enterprises: A Ramsey approach},
journal = {Journal of Monetary Economics},
volume = {141},
pages = {74-97},
year = {2024},
note = {CARNEGIE-ROCHESTER-NYU APRIL 2023 CONFERENCE},
issn = {0304-3932},
doi = {https://doi.org/10.1016/j.jmoneco.2023.10.003},
url = {https://www.sciencedirect.com/science/article/pii/S0304393223001186},
author = {Sebastian Dyrda and Guangbin Hong and Joseph B. Steinberg}
}
Export Market Penetration Dynamics
I develop a dynamic theory of exporting that synthesizes two approaches: static models, in which exporting costs depend on the number of foreign customers a firm serves in the present; and dynamic models, in which these costs depend on whether a firm exported in the past. The theory simultaneously accounts for two sets of established empirical findings: (i) larger markets attract exports from more firms and these exports are more concentrated; and (ii) new exporters are generally smaller and more likely to exit than incumbents. It also accounts for a new set of findings from Brazilian microdata showing that differences between new exporters and incumbents are more pronounced in larger markets. When calibrated to match all of these findings, the theory predicts that trade reforms cause greater but also slower trade growth in smaller markets.
@article{STEINBERG2023103807,
title = {Export market penetration dynamics},
journal = {Journal of International Economics},
volume = {145},
pages = {103807},
year = {2023},
issn = {0022-1996},
doi = {https://doi.org/10.1016/j.jinteco.2023.103807},
url = {https://www.sciencedirect.com/science/article/pii/S0022199623000934},
author = {Joseph B. Steinberg}
}
The Macroeconomic Impact of NAFTA Termination
Mundell Prize for best CJE paper by a “young” author in 2019–2020
US President Trump has threatened to leave the North American Free Trade Agreement. How much would each member country gain or lose if this threat were carried out? Would trade imbalances within the region diminish? What would the transition to new production and consumption patterns look like? I provide quantitative answers to these questions using a dynamic general equilibrium model with a multi-sector input–output production structure, heterogeneous firms that make forward-looking export participation decisions, and adjustment frictions in trade and factor markets. Regional trade flows would fall dramatically, and while the US trade deficit with Canada would decline, the deficit with Mexico would grow. Welfare would fall by 0.04%, 0.12%, and 0.2% in the United States, Canada, and Mexico, respectively, and transition dynamics would significantly affect welfare in both the short run and the long run.
@article{https://doi.org/10.1111/caje.12445,
author = {Steinberg, Joseph B.},
title = {The macroeconomic impact of NAFTA termination},
journal = {Canadian Journal of Economics/Revue canadienne d'économique},
volume = {53},
number = {2},
pages = {821-865},
doi = {https://doi.org/10.1111/caje.12445},
url = {https://onlinelibrary.wiley.com/doi/abs/10.1111/caje.12445},
year = {2020}
}
Comment on "The Economic Effects of Trade Policy Uncertainty"
CRNYU conference volume
The paper by Caldara et al. develops new measures of trade policy uncertainty (TPU) that are associated with reduced economic activity at the micro and macro levels, and uses a DSGE model with sticky prices and sunk exporting costs to illustrate the economic forces driving these results. This discussion provides two forms of additional context for the authors’ findings. First, I shed light on the reasons that firms care about TPU by linking the authors’ dataset to the U.S. input-output accounts. Second, I use a simple model of price-setting under nominal rigidities to explore the sensitivity of the authors’ quantitative results to some of their modeling assumptions.
@Article{RePEc:eee:moneco:v:109:y:2020:i:c:p:60-64,
author={Steinberg, Joseph B.},
title={{Comment on: “The economic effects of Trade Policy Uncertainty” by Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo}},
journal={Journal of Monetary Economics},
year=2020,
volume={109},
number={C},
pages={60-64},
doi={10.1016/j.jmoneco.2019.08},
url={https://ideas.repec.org/a/eee/moneco/v109y2020icp60-64.html}
}
Brexit and the Macroeconomic Impact of Trade Policy Uncertainty
On June 23, 2016, the United Kingdom voted to leave the European Union. The trade policies that will replace E.U. membership are uncertain, however, and speculation abounds that this uncertainty will cause immediate harm to the U.K. economy. In this paper, I use a dynamic general equilibrium model with heterogeneous firms, endogenous export participation, and stochastic trade costs to quantify the impact of uncertainty about post-Brexit trade policies. I find that the total consumption-equivalent welfare cost of Brexit for U.K. households is between 0.4 and 1.2%, but less than a quarter of a percent of this cost is due to uncertainty.
@article{STEINBERG2019175,
title = {Brexit and the macroeconomic impact of trade policy uncertainty},
journal = {Journal of International Economics},
volume = {117},
pages = {175-195},
year = {2019},
issn = {0022-1996},
doi = {https://doi.org/10.1016/j.jinteco.2019.01.009},
url = {https://www.sciencedirect.com/science/article/pii/S0022199619300121},
author = {Joseph B. Steinberg}
}
On the Source of U.S. Trade Deficits: Global Saving Glut or Domestic Saving Drought?
Are U.S. trade deficits caused by high foreign saving—a global saving glut—or low domestic saving—a domestic saving drought? To answer this question, I conduct a wedge accounting analysis of U.S. trade balance dynamics during 1995–2011 using a dynamic general equilibrium model. I find that a global saving glut explains 96 percent of U.S. trade deficits in excess of those that would have occurred naturally as a result of productivity growth and demographic change. Contrary to widespread belief, however, investment distortions, not a global saving glut, account for much of the decline in real interest rates that has accompanied U.S. trade deficits.
@article{STEINBERG2019200,
title = {On the source of U.S. trade deficits: Global saving glut or domestic saving drought?},
journal = {Review of Economic Dynamics},
volume = {31},
pages = {200-223},
year = {2019},
issn = {1094-2025},
doi = {https://doi.org/10.1016/j.red.2018.07.002},
url = {https://www.sciencedirect.com/science/article/pii/S1094202518303843},
author = {Joseph B. Steinberg}
}
International Portfolio Diversification and the Structure of Global Production
In recent decades, country portfolio home bias has fallen in advanced economies but not in emerging economies. I use a dynamic general equilibrium model to show that changes in the distribution of global production and absorption explain this pattern. For advanced economies, whose share of world output fell as their trade openness rose, the model predicts an unambiguous drop in home bias. By contrast, emerging economies' growth in both size and trade openness have opposing implications for portfolios. To quantify these forces I calibrate the model to real and counterfactual input–output tables. Jointly, changes in the global production structure account for much of the decline in home bias in advanced economies and lack thereof in emerging economies. Country size and trade openness account for most of this effect. Consistent with theory, the increase in the intermediate share of trade had little impact.
@article{STEINBERG2018195,
title = {International portfolio diversification and the structure of global production},
journal = {Review of Economic Dynamics},
volume = {29},
pages = {195-215},
year = {2018},
issn = {1094-2025},
doi = {https://doi.org/10.1016/j.red.2018.01.001},
url = {https://www.sciencedirect.com/science/article/pii/S1094202518300048},
author = {Joseph B. Steinberg}
}
Global Imbalances and Structural Change in the United States
Since the early 1990s, as the United States borrowed heavily from the rest of the world, employment in the US goods-producing sector has fallen. We construct a dynamic general equilibrium model with several mechanisms that could generate declining goods-sector employment: foreign borrowing, nonhomothetic preferences, and differential productivity growth across sectors. We find that only 15.1 percent of the decline in goods-sector employment from 1992 to 2012 stems from US trade deficits; most of the decline is due to differential productivity growth. As the United States repays its debt, its trade balance will reverse, but goods-sector employment will continue to fall.
@article{doi:10.1086/696279,
author = {Kehoe, Timothy J. and Ruhl, Kim J. and Steinberg, Joseph B.},
title = {Global Imbalances and Structural Change in the United States},
journal = {Journal of Political Economy},
volume = {126},
number = {2},
pages = {761-796},
year = {2018},
doi = {10.1086/696279},
URL = {https://doi.org/10.1086/696279},
}
The Next Best Thing to Knowing Someone Who is Usually Right
Mean-variance analysis is widely used for portfolio allocation decisions. The use of historical data for the inputs may be inferior to using informed estimates that reflect one's beliefs about the current financial environment. In this article we show that portfolios based on expert opinion can outperform portfolios based on historical data, and that even better performance can be achieved by taking into account regression to the mean.
@article{SmithSteinbergWertheimerJWM2006,
author = {Smith, Gary and Steinberg, Joseph and Wertheimer, Robert},
year = {2006},
month = {10},
title = {The Next Best Thing to Knowing Someone Who is Usually Right},
volume = {9},
journal = {The Journal of Wealth Management},
doi = {10.3905/jwm.2006.661432}
}