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Trade Prices and the Global Trade Collapse of 2008-2009

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  • Gopinath, Gita
  • Itskhoki, Oleg
  • Neiman, Brent

Abstract

We document the behavior of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we fi nd that di fferentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-diff erentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among diff erentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, the frequency and magnitude of price adjustments at the product level changed with the onset of the crisis, consistent with a state-dependent view of price adjustment. The quantitative magnitudes of the changes, however, were not pronounced enough to affect aggregate prices. Our findings present a challenge for theories of the trade collapse based on cost shocks specific to traded goods that work through prices.

Suggested Citation

  • Gopinath, Gita & Itskhoki, Oleg & Neiman, Brent, 2012. "Trade Prices and the Global Trade Collapse of 2008-2009," CEPR Discussion Papers 9158, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9158
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    References listed on IDEAS

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    1. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "Inventories, Lumpy Trade, and Large Devaluations," American Economic Review, American Economic Association, vol. 100(5), pages 2304-2339, December.
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    11. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
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    Cited by:

    1. Arne J. Nagengast & Robert Stehrer, 2016. "The Great Collapse in Value Added Trade," Review of International Economics, Wiley Blackwell, vol. 24(2), pages 392-421, May.
    2. Gozgor, Giray, 2014. "Aggregated and disaggregated import demand in China: An empirical study," Economic Modelling, Elsevier, vol. 43(C), pages 1-8.
    3. Kevin Hjortshøj O'Rourke, 2017. "Two Great Trade Collapses: The Intewar Period & Great Recession Compared," Oxford University Economic and Social History Series _159, Economics Group, Nuffield College, University of Oxford.
    4. Chen, Natalie & Juvenal, Luciana, 2015. "Quality and the Great Trade Collapse," Working Papers 231147, American Association of Wine Economists.
    5. Gozgor, Giray, 2014. "Determinants of domestic credit levels in emerging markets: The role of external factors," Emerging Markets Review, Elsevier, vol. 18(C), pages 1-18.
    6. Alok Johri & Terry Yip, 2015. "Financial Shocks, Customer Capital and the Trade Collapse of 2008-2009," Department of Economics Working Papers 2015-13, McMaster University, revised Sep 2015.
    7. Anderson, Kym, 2013. "Is Georgia the Next “New” Wine-Exporting Country?," Journal of Wine Economics, Cambridge University Press, vol. 8(01), pages 1-28, May.
    8. repec:eee:jimfin:v:81:y:2018:i:c:p:185-202 is not listed on IDEAS
    9. 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, May.
    10. Dinopoulos, Elias & Unel, Bulent, 2015. "Entrepreneurs, jobs, and trade," European Economic Review, Elsevier, vol. 79(C), pages 93-112.
    11. SASAKI Yuri & YOSHIDA Yushi, 2017. "Factor Decomposition of Japan's Trade Balance," Discussion papers 17042, Research Institute of Economy, Trade and Industry (RIETI).
    12. Ertan Oktay & Giray Gozgor, 2013. "Estimation of disaggregated import demand functions for Turkey," Economics Bulletin, AccessEcon, vol. 33(1), pages 575-585.
    13. repec:hrv:faseco:30780147 is not listed on IDEAS
    14. Ready, Robert & Roussanov, Nikolai & Ward, Colin, 2017. "After the tide: Commodity currencies and global trade," Journal of Monetary Economics, Elsevier, vol. 85(C), pages 69-86.
    15. Gita Gopinath, 2015. "The International Price System," NBER Working Papers 21646, National Bureau of Economic Research, Inc.
    16. Imura, Yuko, 2016. "Endogenous trade participation with price rigidities," Journal of International Economics, Elsevier, vol. 100(C), pages 14-33.
    17. Castellares, Renzo & Salas, Jorge, 2016. "Contractual Imperfections and the Impact of Crises on Trade: Evidence from Industry-Level Data," Working Papers 2016-001, Banco Central de Reserva del Perú.

    More about this item

    Keywords

    Durable Goods; Global Trade Collapse; Great Recession; Import and Export Prices;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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