ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book distinguishes from the existing trade news literature in three aspects. First, it tests the hypothesis that the US trade protection and trade deficit news may affect some foreign markets more than they do the US market. Second, by examining the stock price response to trade deficit news on US import-competing and Korean and Taiwanese export-oriented firms in addition to the market indices, the book tries to distinguish between the possible signals conveyed by the trade deficit news, and also reduce the watering down effect resulting from focusing on market indices. Third, it puts more emphasis on testing the hypotheses that the trade deficit news signals an increasing probability of raising protection in the foreseeable future and its competing hypothesis that the trade deficit news signals the further deteriorating competitiveness of US import-competing firms.
