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Trade Prices and the Global Trade Collapse of 2008-2009

Listed author(s):
  • Gopinath, Gita
  • Itskhoki, Oleg
  • Neiman, Brent

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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9158.

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Date of creation: Sep 2012
Handle: RePEc:cpr:ceprdp:9158
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  1. Logan Lewis & Linda Tesar & Andrei Levchenko, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," 2010 Meeting Papers 109, Society for Economic Dynamics.
  2. Raphael S. Schoenle & Raphael A. Auer, 2013. "Market Structure and Exchange Rate Pass-Through," Working Papers 62, Brandeis University, Department of Economics and International Businesss School.
  3. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2008. "Inventories, lumpy trade, and large devaluations," Working Papers 08-3, Federal Reserve Bank of Philadelphia, revised 01 Sep 2009.
  4. Etienne Gagnon, 2006. "Price Setting during Low and High Inflation: Evidence from Mexico," 2006 Meeting Papers 300, Society for Economic Dynamics.
  5. Behrens, Kristian & Corcos, Gregory & Mion, Giordano, 2010. "Trade Crisis? What Trade Crisis?," CEPR Discussion Papers 7956, C.E.P.R. Discussion Papers.
  6. Charles Engel & Jian Wang, 2008. "International Trade in Durable Goods: Understanding Volatility, Cyclicality, and Elasticities," NBER Working Papers 13814, National Bureau of Economic Research, Inc.
  7. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2011. "Trade and the Global Recession," NBER Working Papers 16666, National Bureau of Economic Research, Inc.
  8. Haddad, Mona & Harrison, Ann & Hausman, Catherine, 2011. "Decomposing the great trade collapse : products, prices, and quantities in the 2008-2009 crisis," Policy Research Working Paper Series 5749, The World Bank.
  9. Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.
  10. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Financial Crisis," Working Papers 08-2010, Singapore Management University, School of Economics.
  11. Bricongne, J-C. & Fontagné, L. & Gaulier, G. & Taglioni, D. & Vicard, V., 2009. "Firms and the global crisis: French exports in the turmoil," Working papers 265, Banque de France.
  12. Benjamin R. Mandel, 2010. "Heterogeneous firms and import quality: evidence from transaction-level prices," International Finance Discussion Papers 991, Board of Governors of the Federal Reserve System (U.S.).
  13. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "The great trade collapse of 2008-2009: an inventory adjustment?," Working Papers 10-18, Federal Reserve Bank of Philadelphia.
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