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Cyclical Fluctuations in International Trade Volumes

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  • Michael Waugh

    (New York University)

  • Fernando Leibovici

    (New York University)

Abstract

In postwar time series data, the elasticity of cyclical fluctuations in import volumes to measures of economic activity is well over two. A large class of models of international trade predict this elasticity to be one. This presents a challenge to these models with otherwise well regarded cross-sectional implications for trade. In this paper, we document these facts and explore simple dynamic modifications of existing models and their ability to quantitatively replicate the high elasticity of imports with respect to domestic absorbtion measured in U.S. time series data. In particular, we focus on the joint effect of time-to-ship and trade financing frictions in their ability to resolve this puzzle.

Suggested Citation

  • Michael Waugh & Fernando Leibovici, 2010. "Cyclical Fluctuations in International Trade Volumes," 2010 Meeting Papers 1095, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:1095
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. International Trade and Intertemporal Substitution
      by Christian Zimmermann in NEP-DGE blog on 2014-12-22 21:24:34

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    Cited by:

    1. Ana Maria Santacreu & Fernando Leibovici, 2016. "International Trade Fluctuations and Monetary Policy," 2016 Meeting Papers 367, Society for Economic Dynamics.
    2. David Kohn & Fernando Leibovici & Michal Szkup, 2016. "Financial Frictions And New Exporter Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 453-486, May.
    3. Nicolas Berman & José de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225-260.
    4. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2016. "Trade and the Global Recession," American Economic Review, American Economic Association, vol. 106(11), pages 3401-3438, November.
    5. Logan Lewis, 2013. "Menu Costs, Trade Flows, and Exchange Rate Volatility," 2013 Meeting Papers 313, Society for Economic Dynamics.
    6. Dennis Novy & Alan M. Taylor, 2020. "Trade and Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 102(4), pages 749-765, October.
    7. Nicolas Berman & José de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225-260.
    8. Blonigen, Bruce A. & Piger, Jeremy & Sly, Nicholas, 2014. "Comovement in GDP trends and cycles among trading partners," Journal of International Economics, Elsevier, vol. 94(2), pages 239-247.
    9. Daniel Paravisini & Veronica Rappoport & Philipp Schnabl & Daniel Wolfenzon, 2015. "Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 333-359.
    10. Anna Ivanova & Mr. Sebastian Weber, 2011. "Do Fiscal Spillovers Matter?," IMF Working Papers 2011/211, International Monetary Fund.
    11. Alessandria, George & Choi, Horag, 2021. "The dynamics of the U.S. trade balance and real exchange rate: The J curve and trade costs?," Journal of International Economics, Elsevier, vol. 132(C).
    12. Nicolas Berman & José de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225-260.
    13. Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2013. "The Great Trade Collapse," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 375-400, May.
    14. Nicholas Sly, 2016. "Global Uncertainty and U.S. Exports," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-23.
    15. Nicolas Berman & José de Sousa & Philippe Martin & Thierry Mayer, 2012. "Time to Ship during Financial Crises," SciencePo Working papers hal-03584483, HAL.
    16. Nicolas Berman & José de Sousa & Philippe Martin & Thierry Mayer, 2013. "Time to Ship during Financial Crises," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 225-260.

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F1 - International Economics - - Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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