Crises and the Collapse of World Trade: the Shift to Lower Quality
AbstractOne of the most striking features of the crisis that started during the fall of 2008 has been the sharp decrease in the world volume of trade in goods. The collapse of trade values has been even larger, leading to a decrease of import price indices. We argue that the decrease of import price indices can be explained by a decrease of the demand addressed to the most expansive varieties. Descriptive statistics for the EU15 confirm that the decrease in the import price index is mainly due to a loss in market shares by high price varieties. The estimation of import demand equations confirm that higher price varieties report a larger elasticity with respect to GDP variations, as compared to low price varieties. Countries specialized over high quality varieties are expected to lose more trade in periods of global turmoil, and experience a faster recovery.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 2010-07.
Date of creation: Mar 2010
Date of revision:
GLOBAL CRISIS; INCOME ELASTICITY; QUALITY LADDERS;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pablo Fajgelbaum & Gene M. Grossman & Elhanan Helpman, 2011.
"Income Distribution, Product Quality, and International Trade,"
Journal of Political Economy,
University of Chicago Press, vol. 119(4), pages 721 - 765.
- Pablo D. Fajgelbaum & Gene M. Grossman & Elhanan Helpman, 2009. "Income Distribution, Product Quality, and International Trade," NBER Working Papers 15329, National Bureau of Economic Research, Inc.
- Fajgelbaum, Pablo & Grossman, Gene M. & Helpman, Elhanan, 2011. "Income distribution, product quality, and international trade," Policy Research Working Paper Series 5843, The World Bank.
- Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2008.
"Specialization across varieties and North-South competition,"
CEPR & CES & MSH, vol. 23, pages 51-91, 01.
- Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2007. "Specialisation across Varieties within Products and North-South Competition," Working Papers 2007-06, CEPII research center.
- Thannaletchimy Thanagopal, 2011. "Estimating import price elasticity while controlling for quality," Post-Print dumas-00643757, HAL.
- MARTIN, Julien & MAYNERIS , Florian & ,, 2013.
"High-end variety exporters defying distance: micro facts and macroeconomic implications,"
CORE Discussion Papers
2013061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Julien MARTIN & Florian MAYNERIS, 2013. "High-End Variety Exporters Defying Distance: Micro Facts and Macroeconomic Implications," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.