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Trade Finance and the Great Trade Collapse

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  • JaeBin Ahn
  • Mary Amiti
  • David E. Weinstein

Abstract

Economic models that do not incorporate financial frictions only explain about 70 to 80 percent of the decline in world trade that occurred in the 2008-2009 crisis. We review evidence that shows financial factors also contributed to the great trade collapse and uncover two new stylized facts in support of it. First, we show that the prices of manufactured exports rose relative to domestic prices during the crisis. Second, we show that US seaborne exports and imports, which are likely to be more sensitive to trade finance problems, saw their prices rise relative to goods shipped by air or land.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.3.298
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 3 (May)
Pages: 298-302

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:3:p:298-302

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  1. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
  2. Robert C. Feenstra & Zhiyuan Li & Miaojie Yu, 2011. "Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China," NBER Working Papers 16940, National Bureau of Economic Research, Inc.
  3. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2011. "Trade and the Global Recession," NBER Working Papers 16666, National Bureau of Economic Research, Inc.
  4. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis," NBER Working Papers 16174, National Bureau of Economic Research, Inc.
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Cited by:
  1. Bhattarai, Keshab & Mallick, Sushanta, 2013. "Impact of China's currency valuation and labour cost on the US in a trade and exchange rate model," The North American Journal of Economics and Finance, Elsevier, vol. 25(C), pages 40-59.
  2. Richard Pomfret, 2012. "The Post-2007 Crises and Europe's Place in the Global Economy," CASE Network Studies and Analyses 439, CASE-Center for Social and Economic Research.
  3. Harald Badinger & Thomas Url, 2012. "Export Credit Guarantees and Export Performance. Evidence from Austrian Firm-Level Data," WIFO Working Papers 423, WIFO.
  4. Antonakakis, Nikolaos, 2012. "The great synchronization of international trade collapse," MPRA Paper 39859, University Library of Munich, Germany.
  5. Mirabelle Muûls, 2012. "Exporters, importers and credit constraints," LSE Research Online Documents on Economics 51516, London School of Economics and Political Science, LSE Library.
  6. Rudiger Ahrend & Antoine Goujard, 2012. "International Capital Mobility and Financial Fragility - Part 6. Are all Forms of Financial Integration Equally Risky in Times of Financial Turmoil?: Asset Price Contagion During the Global Financial ," OECD Economics Department Working Papers 969, OECD Publishing.
  7. Nicolas Berman & Philippe Martin, 2012. "The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade," IMF Economic Review, Palgrave Macmillan, vol. 60(3), pages 329-364, September.
  8. Independent Evaluation Group, 2013. "Evaluation of the International Finance Corporation's Global Trade Finance Program, 2006-12," World Bank Publications, The World Bank, number 15769, October.
  9. Toshihiro OKUBO & Fukunari KIMURA & Nozomu TESHIMA, 2013. "Asian Fragmentation in the Global Financial Crisis," Working Papers DP-2013-38, Economic Research Institute for ASEAN and East Asia (ERIA).
  10. Simona Mateut & Piercarlo zanchettin, 2012. "Credit sales and advance payments: substitutes or complements?," Discussion Papers in Economics 12/18, Department of Economics, University of Leicester.
  11. Strasser, Georg, 2013. "Exchange rate pass-through and credit constraints," Journal of Monetary Economics, Elsevier, vol. 60(1), pages 25-38.
  12. Chen, Xing & Munasib, Abdul & Roy, Devesh, 2012. "Financial reforms and international trade:," IFPRI discussion papers 1182, International Food Policy Research Institute (IFPRI).
  13. Richard Pomfret, 2011. "Global Crises, Fiscal Imbalances and Global Instability: Interests and Reactions of Asian Economies," School of Economics Working Papers 2011-33, University of Adelaide, School of Economics.

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