Trade Growth Inertia And Lagged Effects Of Trade Policy

The performance of trade inertia is a series of changes of the volume of tradewhen the process of trade is subjected to external shocks. At first, the immediatechange will be small, then gradually increases to a peak. After a period of time, itgradually decays and disappears.This article researches on the properties of the inertia of the trading system, andanalyzes the mechanism and manifestations of trade inertia. Taking export tax rebatepolicy as an example, it also analyzes the lagged effects of the trade policy on tradeactivities. Firstly, the article analyzes the inertia theory in physics and economics andits related theories, and reviews some literatures on inertia. Secondly, by constructinga PDL model, the lagged effect, which the changes of China’s average export taxrebate rate has had on China’s exports to the US, is studied. The empirical resultsshow that the lagged effects of the export tax rebate rate on China’s exports to the U.Slast3periods, and the impact of the current period is relatively small, but the one ofthe lag first and second period are relatively large, then the one of the lag thirdreduced, which indicates that the existence of trade inertia in trade activities. Thirdly,it makes the descriptive analysis from four aspects: the demand inertia of the US’simport from China; the stability of the volume of the trade during fulfilling theinternational trade contracts period; the influence of sunk costs on corporatedecision-making exports; the existence of export synergies. At last, the paper gives theconclusion of the study, and makes suggestions of relevant policies.