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The Great Trade Collapse

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  • Rudolfs Bems
  • Robert C. Johnson
  • Kei-Mu Yi

Abstract

We survey recent literature on the causes of the collapse in international trade during the 2008-2009 global recession. We argue that the evidence points to the collapse in aggregate expenditure, concentrated on trade-intensive durable goods, as the main driver of the trade collapse. Inventory adjustment likely amplified the impact of these expenditure changes on trade. In addition, shocks to credit supply constrained export supply further exacerbating the decline in trade. Most evidence suggests that changes in trade policy did not play a large role. We conclude that one benefit of the trade collapse is that it has stimulated research in neglected areas at the intersection of trade and macroeconomics.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18632.

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Date of creation: Dec 2012
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Publication status: published as Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2013. "The Great Trade Collapse," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 375-400, 05.
Handle: RePEc:nbr:nberwo:18632

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References

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Citations

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Cited by:
  1. Joachim Wagner, 2014. "The Role of Extensive Margins of Exports in The Great Export Recovery in Germany, 2009/2010," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 234(4), pages 518-526, July.
  2. Youssouf Kiendrebeogo, 2013. "How Do Banking Crises Affect Bilateral Exports?," IMF Working Papers 13/150, International Monetary Fund.
  3. Joachim Wagner, 2013. "Extensive margins of imports in The Great Import Recovery in Germany, 2009/2010," Working Paper Series in Economics 282, University of Lüneburg, Institute of Economics.
  4. Silvia Del Prete & Stefano Federico, 2014. "Trade and finance: is there more than just 'trade finance'? Evidence from matched bank-firm data," Temi di discussione (Economic working papers) 948, Bank of Italy, Economic Research and International Relations Area.
  5. Jinjarak, Yothin, 2013. "Supply Chains and Credit-Market Shocks: Some Implications for Emerging Markets," ADBI Working Papers 443, Asian Development Bank Institute.
  6. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

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