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Trade Crisis? What Trade Crisis?

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  • Kristian Behrens
  • Gregory Corcos
  • Giordano Mion

Abstract

We provide an analysis of the 2008-2009 trade collapse using microdata from a small open economy, Belgium. First, we find that changes in firm-country-product exports and imports occurred mostly at the intensive margin: the number of firms, the average number of destination and origin markets per firm, and the average number of products per market changed only very little. Second, econometric analysis reveals some composition effects in the intensive margin fall along firm, product and country characteristics. The most important factor explaining changes in exports is the destination country's growth rate of GDP. Had growth rates in 2008{2009 been the same as in 2007{2008, Belgian exports would have fallen by about 57% less than what we observe. Trade in consumer durables and capital goods fell more severely than trade in other product categories, which explains another 22% of the observed fall. Financial variables and involvement in global value chains have some explanatory power on the exports and imports fall respectively, but appear to have affected domestic operations in equal proportion. More generally, exports-to-turnover and imports-to-intermediates ratios at the firm level did neither systematically decrease nor reveal strong firm- or sector-specific patterns. Overall, our results point to a demand-side explanation: the fall in trade was mostly driven by the fall in economic activity. It is not a trade crisis | just a trade collapse.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0995.

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Date of creation: Aug 2010
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Handle: RePEc:cep:cepdps:dp0995

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: trade crisis; trade collapse; margins of trade; firm-level analysis; Belgium.;

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References

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  1. Amiti, Mary & Weinstein, David E., 2009. "Exports and Financial Shocks," CEPR Discussion Papers 7590, C.E.P.R. Discussion Papers.
  2. Iacovone, Leonardo & Zavacka, Veronika, 2009. "Banking crises and exports : lessons from the past," Policy Research Working Paper Series 5016, The World Bank.
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Citations

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Cited by:
  1. JaeBin Ahn, 2011. "A Theory of Domestic and International Trade Finance," IMF Working Papers 11/262, International Monetary Fund.
  2. Wagner, Joachim, 2012. "The Microstructure of the Great Export Collapse in German Manufacturing Industries, 2008/2009," IZA Discussion Papers 6393, Institute for the Study of Labor (IZA).
  3. Gita Gopinath & Oleg Itskhoki & Brent Neiman, 2011. "Trade Prices and the Global Trade Collapse of 2008-2009," NBER Working Papers 17594, National Bureau of Economic Research, Inc.
  4. Gabriel J. Felbermayr & Gilbert Spiegel, 2012. "A Simple Theory of Trade, Finance, and Firm Dynamics," CESifo Working Paper Series 3873, CESifo Group Munich.
  5. Tim Schmidt-Eisenlohr, 2010. "Towards a Theory of Trade Finance," Working Papers 1023, Oxford University Centre for Business Taxation.
  6. E. Dhyne & L. Dresse & C. Fuss & Ch. Piette, 2011. "Behaviour of Belgian firms in the context of globalisation : lessons from the conference on “International Trade : Threats and Opportunities in a Globalised World”," Economic Review, National Bank of Belgium, issue I, pages 73-88, June.
  7. 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.
  8. Andrea Ariu & Giordano Mion, 2011. "Service Trade and Occupational Tasks: An Empirical Investigation," CEP Discussion Papers dp1107, Centre for Economic Performance, LSE.
  9. Ran Jing, 2011. "The Collapse Speed of China's Exports in the 2008-2009 Financial Crisis," CESifo Working Paper Series 3584, CESifo Group Munich.
  10. Dimitra Petropoulou & Kwok Tong Soo, 2011. "Product durability and trade volatility," Globalization and Monetary Policy Institute Working Paper 94, Federal Reserve Bank of Dallas.
  11. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
  12. Escaith, Hubert, 2009. "Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession (revised)," MPRA Paper 31864, University Library of Munich, Germany, revised Jun 2011.
  13. Alyson C. Ma & Ari Van Assche, 2012. "Is East Asia’s Economic Fate Chained to the West?," CIRANO Working Papers 2012s-11, CIRANO.

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