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Global Value Chains and Changing Trade Elasticities

Author

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  • Byron Gangnes

    (Department of Economics, University of Hawaii at Manoa; UHERO)

  • Ari Van Assche

    (Department of International Business, HEC Montréal)

Abstract

The trade collapse of 2008-2009 and the anemic trade growth since then raise the question of whether trade elasticities may be undergoing fundamental structural change. A potential source of such change is the spread of global value chains (GVCs), which have brought a marked increase in the use of intermediate goods and changes in the nature of trade competition. We review the recent literature on the impact of GVCs on measured trade elasticities and the ways in which their emergence may affect how we estimate and interpret trade responsiveness. We then draw out a few implications of recent research for global modeling.

Suggested Citation

  • Byron Gangnes & Ari Van Assche, 2016. "Global Value Chains and Changing Trade Elasticities," Working Papers 2016-11, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
  • Handle: RePEc:hae:wpaper:2016-11
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    Cited by:

    1. Xuefeng Qian & Zhao Liu & Ying Pan, 2017. "China's Trade Slowdown: Cyclical or Structural?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 25(6), pages 65-83, November.

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    More about this item

    Keywords

    Global value chains; trade elasticities;

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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