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The Great Trade Collapse

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Author Info

  • Rudolfs Bems

    (International Monetary Fund, Washington, DC 20431)

  • Robert C. Johnson

    (Department of Economics, Dartmouth College, Hanover, New Hampshire 03755
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)

  • Kei-Mu Yi

    ()
    (Federal Reserve Bank of Minneapolis, Minneapolis, Minnesota 55401)

Abstract

We survey recent literature on the causes of the collapse in international trade during the 2008–2009 global recession. We argue that the evidence points to the collapse in aggregate expenditure, concentrated on trade-intensive durable goods, as the main driver of the trade collapse. Inventory adjustment likely amplified the impact of these expenditure changes on trade. In addition, shocks to credit supply constrained export supply, further exacerbating the decline in trade. Most evidence suggests that changes in trade policy did not play a large role. We conclude that one benefit of the trade collapse is that it has stimulated research in neglected areas at the intersection of trade and macroeconomics.

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Bibliographic Info

Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 5 (2013)
Issue (Month): 1 (05)
Pages: 375-400

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Handle: RePEc:anr:reveco:v:5:y:2013:p:375-400

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Related research

Keywords: Great Recession; trade finance; trade policy; import demand; world trade;

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References

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  1. Kei-Mu Yi & Rudolfs Bems & Robert C. Johnson, 2010. "Demand Spillovers and the Collapse of Trade in the Global Recession," IMF Working Papers 10/142, International Monetary Fund.
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Citations

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Cited by:
  1. Wagner, Joachim, 2013. "The Role of extensive margins of exports in The Great Export Recovery in Germany, 2009/2010," Working Paper Series in Economics and Institutions of Innovation 302, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  2. Youssouf KIENDREBEOGO, 2013. "How Do Banking Crises Affect Bilateral Exports?," Working Papers 201313, CERDI.
  3. Jinjarak, Yothin, 2013. "Supply Chains and Credit-Market Shocks: Some Implications for Emerging Markets," ADBI Working Papers 443, Asian Development Bank Institute.
  4. Wagner, Joachim, 2013. "Extensive margins of imports in The Great Import Recovery in Germany, 2009/2010," Working Paper Series in Economics and Institutions of Innovation 324, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  5. Silvia Del Prete & Stefano Federico, 2014. "Trade and finance: is there more than just 'trade finance'? Evidence from matched bank-firm data," Temi di discussione (Economic working papers) 948, Bank of Italy, Economic Research and International Relations Area.
  6. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

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