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Quality and the Great Trade Collapse

Author

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  • Natalie Chen
  • Luciana Juvenal

Abstract

We explore whether the global financial crisis has had heterogeneous effects on traded goods differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, we show that higher quality exports grew faster before the crisis, but this trend reversed during the recession. Quantitatively, the effect is large: up to nine percentage points difference in trade performance can be explained by the quality composition of exports. This flight from quality was triggered by a fall in aggregate demand, was more acute when households could substitute imports by domestic alternatives, and was stronger for smaller firms’ exports.

Suggested Citation

  • Natalie Chen & Luciana Juvenal, 2015. "Quality and the Great Trade Collapse," CESifo Working Paper Series 5595, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5595
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp5595.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mattia Di Ubaldo, 2015. "Product Cost-Share: a Catalyst of the Trade Collapse," Working Paper Series 8015, Department of Economics, University of Sussex Business School.
    2. Di Ubaldo, Mattia, 2016. "Firms and trade in downturns," Economics PhD Theses 0416, Department of Economics, University of Sussex Business School.
    3. A. M. M. Shahiduzzaman Quoreshi & Trudy-Ann Stone, 2019. "Do Global Value Chains Make Firms More Vulnerable to Trade Shocks?—Evidence from Manufacturing Firms in Sweden," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 12(3), pages 1-16, September.

    More about this item

    Keywords

    exports; heterogeneity; multi-product firms; quality; trade collapse; unit values; wine;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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