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Trade Prices and the Global Trade Collapse of 2008-2009

  • Gita Gopinath
  • Oleg Itskhoki
  • Brent Neiman

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 find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17594.

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Date of creation: Nov 2011
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Publication status: published as “Trade Prices and the Global Trade Collapse of 2008-09” (with Oleg Itskhoki and Brent Neiman) IMF Economic Review, September 2012, Volume 60
Handle: RePEc:nbr:nberwo:17594
Note: EFG IFM ITI ME
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  1. Gita Gopinath & Brent Neiman, 2014. "Trade Adjustment and Productivity in Large Crises," American Economic Review, American Economic Association, vol. 104(3), pages 793-831, March.
  2. George Alessandria & Joseph Kaboski & Virgiliu Midrigan, 2008. "Inventories, Lumpy Trade, and Large Devaluations," NBER Working Papers 13790, National Bureau of Economic Research, Inc.
  3. 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.
  4. Sam Kortum & John Romalis & Brent Neiman & Jonathan Eaton, 2010. "Trade and the Global Recession," 2010 Meeting Papers 1340, Society for Economic Dynamics.
  5. 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.
  6. 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.
  7. Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.
  8. Mona Haddad & Ann Harrison & Catherine Hausman, 2010. "Decomposing the Great Trade Collapse: Products, Prices, and Quantities in the 2008-2009 Crisis," NBER Working Papers 16253, National Bureau of Economic Research, Inc.
  9. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," NBER Working Papers 16006, National Bureau of Economic Research, Inc.
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