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Trade, globalization and the financial crisis


  • Mark A. Wynne
  • Erasmus K. Kersting


The financial crisis that began in August 2007 and intensified in the fall of 2008 pushed the global economy into a severe downturn that some have called the Great Recession. The decline in trade and the protectionist instincts that invariably come to the fore in difficult economic times have raised concerns that today's crisis may lead to deglobalization. ; We will illustrate the crisis' impact on world trade and examine the typical patterns of international trade over the business cycle. We urge caution in using trade data to estimate the extent of globalization or deglobalization. And we present evidence that international trade has fallen by more than expected given the course of the current business cycle. ; This raises the question of what might have accounted for the excess decline. We look at two possibilities: first, a direct effect on trade flows associated with a drying up of trade finance at the height of the crisis; second, a breakout of protectionist measures. We conclude that trade finance is the most likely explanation. However, it's vitally important to remain vigilant to the risks of protectionism.

Suggested Citation

  • Mark A. Wynne & Erasmus K. Kersting, 2009. "Trade, globalization and the financial crisis," Economic Letter, Federal Reserve Bank of Dallas, vol. 4(nov).
  • Handle: RePEc:fip:feddel:y:2009:i:nov:n:v.4no.8

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    Cited by:

    1. Zhichao Guo & Yuanhua Feng & Thomas Gries, 2015. "Changes of China’s agri-food exports to Germany caused by its accession to WTO and the 2008 financial crisis," China Agricultural Economic Review, Emerald Group Publishing, vol. 7(2), pages 262-279, May.
    2. Kadochnikov, Pavel & Aliev, Timur, 2014. "On the question of the presence of de-globalization in world trade," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, pages 127-149, October.
    3. Ahmad, Saad & Civelli, Andrea, 2016. "Globalization and inflation: A threshold investigation," Journal of Macroeconomics, Elsevier, vol. 48(C), pages 283-304.
    4. repec:fip:feddgm:00014 is not listed on IDEAS
    5. Ingo Barens & Peter Flaschel & Florian Hartmann & Andreas Röthig, 2010. "Kaldorian boom-bust cycles in the housing market," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(2), pages 361-375.
    6. Guo, Zhichao & Feng, Yuanhua & Tan, Xiangyong, 2011. "Short- and long-term impact of remarkable economic events on the growth causes of China–Germany trade in agri-food products," Economic Modelling, Elsevier, vol. 28(6), pages 2359-2368.


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