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Time to Ship during Financial Crises

  • Nicolas Berman
  • Jos� de Sousa
  • Philippe Martin
  • Thierry Mayer

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 found that this magnification effect is robust to alternative specifications, samples and inclusion of additional controls, including distance. The form level predictions are also broadly consistent with French exporter data from 1995 to 2005.

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File URL: http://www.jstor.org/stable/full/10.1086/669587
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Article provided by University of Chicago Press in its journal NBER International Seminar on Macroeconomics.

Volume (Year): 9 (2013)
Issue (Month): 1 ()
Pages: 225 - 260

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Handle: RePEc:ucp:intsma:doi:10.1086/669587
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  1. 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.
  2. Scott L. Baier & Jeffrey H. Bergstrand, 2005. "Do free trade agreements actually increase members’ international trade?," Working Paper 2005-03, Federal Reserve Bank of Atlanta.
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  14. de Sousa, J. & Mayer, T. & Zignago, S., 2011. "Market access in global and regional trade," Working papers 358, Banque de France.
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  18. repec:spo:wpecon:info:hdl:2441/9261 is not listed on IDEAS
  19. Helene Rey & Philippe Martin, 2005. "Globalization and Emerging Markets: With or Without Crash?," 2005 Meeting Papers 152, Society for Economic Dynamics.
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