A Probabilistic Estimate of International Trade Risk: Quantifications of Trade Policy Outcomes

In this chapter different alignments of trade policy give rise to different structural risks. These risks are described by means of standard probability distributions, which are stylized descriptions of what managers and investors expect to occur. Their objective is to "establish a link between the trade of policy formation and corporate investment behavior." It also makes a preliminary investigation into the probabilistic nature of trade policy and its effects on corporate business decisions, which opens up a number of avenues of research. The analysis can also be used for an evaluation of the effects of anticipated and unanticipated protectionist measures on an industry's productive capacity.