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Trade crisis? What trade crisis?

  • Kristian Behrens
  • Giordano Mion

We provide an analysis of the 2008-2009 trade collapse using microdata from a small open economy,Belgium. First, we find that changes in firm-country-product exports and imports occurred mostly atthe intensive margin: the number of firms, the average number of destination and origin markets perfirm, and the average number of products per market changed only very little. Second, econometricanalysis reveals some composition effects in the intensive margin fall along firm, product and countrycharacteristics. The most important factor explaining changes in exports is the destination country'sgrowth rate of GDP. Had growth rates in 20082009 been the same as in 20072008, Belgian exportswould have fallen by about 57 less than what we observe. Trade in consumer durables and capitalgoods fell more severely than trade in other product categories, which explains another 22 of theobserved fall. Financial variables and involvement in global value chains have some explanatorypower on the exports and imports fall respectively, but appear to have affected domestic operations inequal proportion. More generally, exports-to-turnover and imports-to-intermediates ratios at the firmlevel did neither systematically decrease nor reveal strong firm- or sector-specific patterns. Overall,our results point to a demand-side explanation: the fall in trade was mostly driven by the fall ineconomic activity. It is not a trade crisis | just a trade collapse.,

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File URL: http://eprints.lse.ac.uk/48910/
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 48910.

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Length: 48 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:ehl:lserod:48910
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  1. Kristian Behrens & Giordano Mion, 2010. "Trade crisis? What trade crisis?," LSE Research Online Documents on Economics 48910, London School of Economics and Political Science, LSE Library.
  2. 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.
  3. 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.
  4. Agnès Bénassy-Quéré & Yvan Decreux & Lionel Fontagné & David Khoudour-Castéras, 2009. "Economic Crisis and Global Supply Chains," Working Papers 2009-15, CEPII research center.
  5. Cameron, A. Colin & Gelbach, Jonah B. & Miller, Douglas L., 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 238-249.
  6. Berman, Nicolas & Martin, Philippe, 2010. "The vulnerability of sub-Saharan Africa to the financial crisis: the case of trade," CEPR Discussion Papers 7765, C.E.P.R. Discussion Papers.
  7. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
  8. Iacovone, Leonardo & Zavacka, Veronika, 2009. "Banking crises and exports : lessons from the past," Policy Research Working Paper Series 5016, The World Bank.
  9. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2001. "Market entry costs, producer heterogeneity and export dynamics," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 03-10, Indian Statistical Institute, New Delhi, India.
  10. Araújo, Sónia & Oliveira Martins, Joaquim, 2011. "The Great Synchronisation : tracking the trade collapse with high-frequency data," Economics Papers from University Paris Dauphine 123456789/8088, Paris Dauphine University.
  11. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2009. "Trade Booms, Trade Busts, and Trade Costs," NBER Working Papers 15267, National Bureau of Economic Research, Inc.
  12. Virgiliu Midrigan & Joseph Kaboski & George Alessandria, 2010. "The Great Trade Collapse of 2008-09: An Inventory Adjustment?," 2010 Meeting Papers 107, Society for Economic Dynamics.
  13. Mary Amiti & David E. Weinstein, 2009. "Exports and Financial Shocks," NBER Working Papers 15556, National Bureau of Economic Research, Inc.
  14. 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.
  15. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
  16. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  17. Freund, Caroline, 2009. "The trade response to global downturns : historical evidence," Policy Research Working Paper Series 5015, The World Bank.
  18. 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.
  19. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
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