Is Our World Going to Get a Whole Lot Smaller?
AbstractThe surge of oil prices in recent years has led to speculation that rising transportation costs could end the period of dramatic world trade growth Ñin the words of Rubin (2009), ÒÉYour world is going to get a whole lot smaller.Ó Using data from ChinaÕs Customs Statistics, we examine the impact of oil prices on tradeÕs sensitivity to distance. We find that higher oil prices increase tradeÕs elasticity to distance, but that the economic effect is small. We also find that the effect is more pronounced for trade within global production networks, and less large for goods shipped by air.
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Bibliographic InfoPaper provided by University of Hawaii Economic Research Organization, University of Hawaii at Manoa in its series Working Papers with number 2011-1.
Length: 41 pages
Date of creation: Jan 2011
Date of revision:
oil prices; distance; trade; vertical specialization; mode of transport; China.;
Find related papers by JEL classification:
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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- Santos Silva, Joao & Tenreyro, Silvana, 2005.
"The Log of Gravity,"
CEPR Discussion Papers
5311, C.E.P.R. Discussion Papers.
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