Measuring Global Trade Policy Activity

This paper introduces the Trade Policy Activity (TPA) Index, a novel indicator measuring evolving global trade policy dynamics since the Global Financial Crisis. Using a Dynamic Factor Model on comprehensive trade policy data covering 197 countries and territories, we document a structural shift around 2019 with a substantial expansion in the use of trade policies. The TPA Index also identifies cyclical episodes of heightened activity and reveals interconnections between different types of measures. We are also able to identify systematic differences in trade policy deployment among groups of economies. Additionally, we employ MIDAS (Mixed Data Sampling) regressions with high-frequency data to develop nowcasting capabilities for trade policy activity, enabling real-time identification of potential policy shifts. These results contribute to the trade policy measurement literature and offer a tool for monitoring global trade policy developments in real time