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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
Date of revision:
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
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  1. Samuel S. Kortum & Jonathan Eaton & Brent Neiman & John Romalis, 2010. "Trade and the Global Recession," DEGIT Conference Papers c015_002, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Haddad, Mona & Harrison, Ann & Hausman, Catherine, 2011. "Decomposing the great trade collapse : products, prices, and quantities in the 2008-2009 crisis," Policy Research Working Paper Series 5749, The World Bank.
  3. Benjamin R. Mandel, 2010. "Heterogeneous firms and import quality: evidence from transaction-level prices," International Finance Discussion Papers 991, Board of Governors of the Federal Reserve System (U.S.).
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  5. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2008. "Inventories, lumpy trade, and large devaluations," Working Paper Series WP-08-07, Federal Reserve Bank of Chicago.
  6. Bricongne, J-C. & Fontagné, L. & Gaulier, G. & Taglioni, D. & Vicard, V., 2009. "Firms and the global crisis: French exports in the turmoil," Working papers 265, Banque de France.
  7. Gopinath, Gita & Neiman, Brent, 2014. "Trade Adjustment and Productivity in Large Crises," Scholarly Articles 12330899, Harvard University Department of Economics.
  8. 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.
  9. Kristian Behrens & Gregory Corcos & Giordano Mion, 2011. "Trade Crisis ? What Trade Crisis ?," Cahiers de recherche 1117, CIRPEE.
  10. 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.
  11. Joseph S. Vavra, 2013. "Inflation Dynamics and Time-Varying Volatility: New Evidence and an Ss Interpretation," NBER Working Papers 19148, National Bureau of Economic Research, Inc.
  12. 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.
  13. Jean-Charles Bricongne & Lionel Fontagné & Guillaume Gaulier & Vincent Vicard & Daria Taglioni, 2012. "Firms and the global crisis: French exports in the turmoil," PSE - Labex "OSE-Ouvrir la Science Economique" hal-00639897, HAL.
  14. Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.
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