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U.S. trade and inventory dynamics

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  • George Alessandria
  • Joseph P. Kaboski
  • Virgiliu Midrigan

Abstract

The authors examine the source of the large fall and rebound in U.S. trade in the recent recession. While trade fell and rebounded more than expenditures or production of traded goods, they find that relative to the magnitude of the downturn, these trade fluctuations were in line with those in previous business cycle fluctuations. The authors argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade. They present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings helps explain these fluctuations in trade.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 11-6.

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Date of creation: 2011
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Handle: RePEc:fip:fedpwp:11-6

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Keywords: Trade ; Financial crises ; Inventories;

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References

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  1. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "The Great Trade Collapse of 2008-09: An Inventory Adjustment?," NBER Working Papers 16059, National Bureau of Economic Research, Inc.
  2. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2011. "Trade and the Global Recession," NBER Working Papers 16666, National Bureau of Economic Research, Inc.
  3. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," NBER Working Papers 16006, National Bureau of Economic Research, Inc.
  4. George Alessandria & Joseph Kaboski & Virgiliu Midrigan, 2008. "Inventories, lumpy trade, and large devaluations," Working Paper Series, Federal Reserve Bank of Chicago WP-08-07, Federal Reserve Bank of Chicago.
  5. Amiti, Mary & Weinstein, David E., 2009. "Exports and Financial Shocks," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7590, C.E.P.R. Discussion Papers.
  6. Chor, Davin & Manova, Kalina, 2012. "Off the cliff and back? Credit conditions and international trade during the global financial crisis," Journal of International Economics, Elsevier, Elsevier, vol. 87(1), pages 117-133.
  7. Virgiliu Midrigan & Joe Kaboski & George Alessandria, 2012. "Trade, Inventories, and International Business Cycles," 2012 Meeting Papers, Society for Economic Dynamics 762, Society for Economic Dynamics.
  8. Engel, Charles & Wang, Jian, 2011. "International trade in durable goods: Understanding volatility, cyclicality, and elasticities," Journal of International Economics, Elsevier, Elsevier, vol. 83(1), pages 37-52, January.
  9. Boileau, Martin, 1999. "Trade in capital goods and the volatility of net exports and the terms of trade," Journal of International Economics, Elsevier, Elsevier, vol. 48(2), pages 347-365, August.
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Citations

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Cited by:
  1. Gabor Békés & Lionel Gérard Fontagné & Balazs Murakozy & Vincent Vicard, 2014. "Shipment Frequency of Exporters and Demand Uncertainty," CESifo Working Paper Series, CESifo Group Munich 4734, CESifo Group Munich.
  2. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers, Banco de Portugal, Economics and Research Department w201403, Banco de Portugal, Economics and Research Department.
  3. Gábor Békés & Lionel Fontagné & Balázs Muraközy & Vincent Vicard, 2012. "How frequently firms export? Evidence from France," CeFiG Working Papers, Center for Firms in the Global Economy 18, Center for Firms in the Global Economy, revised 01 Mar 2012.
  4. Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2012. "The Great Trade Collapse," NBER Working Papers 18632, National Bureau of Economic Research, Inc.
  5. Alyson C. Ma & Ari Van Assche, 2012. "Is East Asia’s Economic Fate Chained to the West?," CIRANO Working Papers, CIRANO 2012s-11, CIRANO.
  6. George Alessandria & Joseph Kaboski & Virgiliu Midrigan, 2012. "Trade wedges, inventories, and international business cycles," Working Papers, Federal Reserve Bank of Philadelphia 12-16, Federal Reserve Bank of Philadelphia.
  7. Didier, Tatiana & Hevia, Constantino & Schmukler, Sergio L., 2011. "How resilient and countercyclical were emerging economies to the global financial crisis ?," Policy Research Working Paper Series, The World Bank 5637, The World Bank.
  8. Veronika Zavacka, 2012. "The bullwhip effect and the Great Trade Collapse," Working Papers, European Bank for Reconstruction and Development, Office of the Chief Economist 148, European Bank for Reconstruction and Development, Office of the Chief Economist.
  9. Andreas Kropf & Philip Ulrich Sauré, 2012. "Fixed Costs per Shipment," Working Papers, Swiss National Bank 2012-13, Swiss National Bank.
  10. Richard Pomfret, 2012. "The Post-2007 Crises and Europe's Place in the Global Economy," CASE Network Studies and Analyses, CASE-Center for Social and Economic Research 439, CASE-Center for Social and Economic Research.
  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, The Vienna Institute for International Economic Studies, wiiw 383, The Vienna Institute for International Economic Studies, wiiw.
  12. Didier, Tatiana & Hevia, Constantino & Schmukler, Sergio L., 2012. "How resilient and countercyclical were emerging economies during the global financial crisis?," Journal of International Money and Finance, Elsevier, Elsevier, vol. 31(8), pages 2052-2077.
  13. Richard Pomfret, 2011. "Global Crises, Fiscal Imbalances and Global Instability: Interests and Reactions of Asian Economies," School of Economics Working Papers, University of Adelaide, School of Economics 2011-33, University of Adelaide, School of Economics.

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