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Time to ship during Financial Crisis

Author

Listed:
  • Nicolas Berman

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IHEID - Graduate Institute of International and Development studies)

  • José de Sousa

    (UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Thierry Mayer

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Philippe Martin

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research)

Abstract

We show that the negative impact of financial crises on trade is magnified for destinations with longer time-to-ship. A simple model where exporters react to an increase in the probability of default of importers by increasing their export price and decreasing their export volumes to destinations in crisis is consistent with this empirical finding. For longer shipping time, those effects are indeed magnified as the probability of default increases as time passes. Some exporters also decide to stop exporting to the crisis destination, the more so the longer time-to-ship. Using aggregate data from 1950 to 2009, we found that this magnification effect is robust to alternative specifications, samples and inclusion of additional controls, including distance. The form level predictions are also broadly consistent with French exporter data from 1995 to 2005.

Suggested Citation

  • Nicolas Berman & José de Sousa & Thierry Mayer & Philippe Martin, 2013. "Time to ship during Financial Crisis," SciencePo Working papers hal-03460785, HAL.
  • Handle: RePEc:hal:wpspec:hal-03460785
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03460785
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    References listed on IDEAS

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    More about this item

    Keywords

    Time-to-ship; Financial crises; international trade;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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