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Time to ship during Financial Crisis

  • Nicolas Berman

    (Centre d'économie de la Sorbonne)

  • José de Sousa

    (Université Panthéon-Sorbonne - Paris I)

  • Thierry Mayer

    (Département d'économie)

  • Philippe Martin

    (Département d'économie)

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.

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Paper provided by Sciences Po in its series Sciences Po publications with number 2013-14.

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Date of creation: Sep 2013
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Handle: RePEc:spo:wpmain:info:hdl:2441/6ggbvnr6munghes9oc1hne632
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  1. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2010. "Firms and the global crisis: French exports in the turmoil," Working Paper Series 1245, European Central Bank.
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  11. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Role of Financial Factors in the Trade Collapse: A Skeptic's View," Working Papers 616, Research Seminar in International Economics, University of Michigan.
  12. de Sousa, José & Mayer, Thierry & Zignago, Soledad, 2012. "Market Access in Global and Regional Trade," CEPR Discussion Papers 9085, C.E.P.R. Discussion Papers.
  13. Márcio Valério Ronci, 2004. "Trade Finance and Trade Flows: Panel Data Evidence From 10 Crises," IMF Working Papers 04/225, International Monetary Fund.
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  16. Guimaraes, Paulo & Portugal, Pedro, 2009. "A Simple Feasible Alternative Procedure to Estimate Models with High-Dimensional Fixed Effects," IZA Discussion Papers 3935, Institute for the Study of Labor (IZA).
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