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The Role of Financial Factors in the Trade Collapse: A Skeptic's View

  • Andrei A. Levchenko

    (University of Michigan)

  • Logan T. Lewis

    (University of Michigan)

  • Linda L. Tesar

    (University of Michigan)

This paper explores the role of financial factors in the 2008-9 collapse of U.S. imports and exports. Using highly disaggregated international trade data, we examine whether the cross-sectoral variation in how much imports or exports fell during this episode can be explained by financial variables. To do this, we employ a wide variety of possible indicators, such as standard measures of trade credit and external finance dependence, proxies for shipping lags at the sector level, and shares of intra-firm trade in each sector. Overall, there is very little evidence that financial factors played a role in the collapse of U.S. trade.

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File URL: http://www.fordschool.umich.edu/rsie/workingpapers/Papers601-625/r616.pdf
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Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 616.

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Length: 13 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:mie:wpaper:616
Contact details of provider: Postal: ANN ARBOR MICHIGAN 48109
Web page: http://fordschool.umich.edu/rsie/

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  1. Love, Inessa & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2007. "Trade credit and bank credit: Evidence from recent financial crises," Journal of Financial Economics, Elsevier, vol. 83(2), pages 453-469, February.
  2. Davin Chor & Kalina Manova, 2010. "Off the Cliff and Back? Credit Conditions and International Trade during the Global Fnancial Crisis," NBER Chapters, in: Market Institutions and Financial Market Risk National Bureau of Economic Research, Inc.
  3. Amiti, Mary & Weinstein, David E., 2009. "Exports and Financial Shocks," CEPR Discussion Papers 7590, C.E.P.R. Discussion Papers.
  4. Andrei A. Levchenko & Logan Lewis & Linda L. Tesar, 2009. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," Working Papers 592, Research Seminar in International Economics, University of Michigan.
  5. Iacovone, Leonardo & Zavacka, Veronika, 2009. "Banking crises and exports : lessons from the past," Policy Research Working Paper Series 5016, The World Bank.
  6. Hummels, David L. & Schaur, Georg, 2010. "Hedging price volatility using fast transport," Journal of International Economics, Elsevier, vol. 82(1), pages 15-25, September.
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