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Time to Ship During Financial Crises

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  • Nicolas Berman
  • José De Sousa
  • Philippe Martin
  • Thierry Mayer

Abstract

We show that the negative impact of financial crises on trade is magnified for destinations with longer time-to-ship. A simple model where exporters react to an increase in the probability of default of importers by increasing their export price and decreasing their export volumes to destinations in crisis is consistent with this empirical finding. For longer shipping time, those effects are indeed magnified as the probability of default increases as time passes. Some exporters also decide to stop exporting to the crisis destination, the more so the longer time-to-ship. Using aggregate data from 1950 to 2009, we find that this magnification effect is robust to alternative specifications, samples and inclusion of additional controls, including distance. The firm level predictions are also broadly consistent with French exporter data from 1995 to 2005.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18274.

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Date of creation: Aug 2012
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Publication status: published as Nicolas Berman & Jos� de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225 - 260.
Handle: RePEc:nbr:nberwo:18274

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References

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  1. Paulo Guimarães & Pedro Portugal, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," Working Papers, Banco de Portugal, Economics and Research Department w200909, Banco de Portugal, Economics and Research Department.
  2. Logan Lewis & Linda Tesar & Andrei Levchenko, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," 2010 Meeting Papers, Society for Economic Dynamics 109, Society for Economic Dynamics.
  3. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis," NBER Working Papers 16174, National Bureau of Economic Research, Inc.
  4. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, American Economic Association, vol. 101(5), pages 1676-1706, August.
  5. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2010. "Firms and the global crisis: French exports in the turmoil," Working Paper Series, European Central Bank 1245, European Central Bank.
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  7. 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.
  8. Philippe Martin & Hélène Rey, 2006. "Globalization and Emerging Markets: With or Without Crash?," Sciences Po publications, Sciences Po info:hdl:2441/9261, Sciences Po.
  9. De Sousa, José & Mayer, Thierry & Zignago, Soledad, 2012. "Market Access in Global and Regional Trade," CEPREMAP Working Papers (Docweb), CEPREMAP 1201, CEPREMAP.
  10. Eaton, Jonathan & Kortum, Sam & Neiman, Brent & Romalis, John, 2013. "Trade and the Global Recession," Working Papers, University of Sydney, School of Economics 2013-21, University of Sydney, School of Economics.
  11. Kalina Manova & Zhiwei Zhang, 2012. "Export Prices Across Firms and Destinations," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 379-436.
  12. Tim Schmidt-Eisenlohr, 2011. "Towards a Theory of Trade Finance," Economics Series Working Papers, University of Oxford, Department of Economics 583, University of Oxford, Department of Economics.
  13. Scott L. Baier & Jeffrey H. Bergstrand, 2005. "Do free trade agreements actually increase members’ international trade?," Working Paper, Federal Reserve Bank of Atlanta 2005-03, Federal Reserve Bank of Atlanta.
  14. JaeBin Ahn, 2011. "A Theory of Domestic and International Trade Finance," IMF Working Papers, International Monetary Fund 11/262, International Monetary Fund.
  15. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Role of Financial Factors in the Trade Collapse: A Skeptic's View," Working Papers, Research Seminar in International Economics, University of Michigan 616, Research Seminar in International Economics, University of Michigan.
  16. repec:spo:wpecon:info:hdl:2441/9261 is not listed on IDEAS
  17. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "The great trade collapse of 2008-2009: an inventory adjustment?," Working Papers 10-18, Federal Reserve Bank of Philadelphia.
  18. Nicolas Berman & Philippe Martin, 2012. "The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade," IMF Economic Review, Palgrave Macmillan, Palgrave Macmillan, vol. 60(3), pages 329-364, September.
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Cited by:
  1. Pauline Bourgeon & Jean-Charles Bricongne & Guillaume Gaulier, 2012. "Financing time to trade : Evidence from French firms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00677343, HAL.
  2. Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2012. "The Great Trade Collapse," NBER Working Papers 18632, National Bureau of Economic Research, Inc.
  3. Nicolas Berman & Philippe Martin, 2012. "The Vulnerability of Sub-Saharan Africa to Financial Crises: The Case of Trade," IMF Economic Review, Palgrave Macmillan, Palgrave Macmillan, vol. 60(3), pages 329-364, September.
  4. Philippe MARTIN & Thierry MAYER & Florian MAYNERIS, 2013. "Are clusters more resilient in crises? Evidence from French exporters in 2008-2009," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales), Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) 2013026, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. repec:hal:journl:halshs-00677343 is not listed on IDEAS

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