Work

Heterogeneous price responses to trade policy uncertainty: Evidence from income-specific CPIs

Year: 2025

Type: article

Abstract: This paper examines the heterogeneous effects of trade policy uncertainty (TPU) on consumer prices across the income distribution. Using income-specific CPI data and a TPU shock measure derived from monthly tariff rates, I estimate impulse responses via local projections. The results show that prices faced by top-income households rise more strongly in response to TPU shocks than those faced by low-income households. These findings suggest that uncertainty-induced demand effect is more pronounced among low-income households, highlighting the importance of accounting for heterogeneity when assessing the macroeconomic implications of TPU.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112623

Author: Fikret Bilenkisi

Institution: University of Huddersfield

Language: English

Topic: Market Dynamics and Volatility

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: No poverty, Reduced inequalities

Open Access status: hybrid

Estimated APC paid: $3,030