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- Title
The Collapse of International Trade during the 2008-09 Crisis: In Search of the Smoking Gun.
- Authors
Levchenko, Andrei A; Lewis, Logan T; Tesar, Linda L
- Abstract
One of the most striking aspects of the recent recession is the collapse in international trade. This paper uses disaggregated data on U.S. imports and exports to shed light on the anatomy of this collapse. The paper finds that the recent reduction in trade relative to overall economic activity is far larger than in previous downturns. Information on quantities and prices of both domestic absorption and imports reveals a 40 percent shortfall in imports, relative to what would be predicted by a simple import demand relationship. In a sample of imports and exports disaggregated at the 6-digit NAICS level, the paper finds that sectors used as intermediate inputs experienced significantly higher percentage reductions in both imports and exports. It also finds support for compositional effects: sectors with larger reductions in domestic output had larger drops in trade. By contrast, the paper finds no support for the hypothesis that trade credit played a role in the recent trade collapse.
- Subjects
UNITED States; INTERNATIONAL trade; RECESSIONS; GLOBAL Financial Crisis, 2008-2009; EXPORT &; import trade of commercial products; PETROLEUM products; ECONOMIC activity; ABSORPTION costing
- Publication
IMF Economic Review, 2010, Vol 58, Issue 2, p214
- ISSN
2041-4161
- Publication type
Article
- DOI
10.1057/imfer.2010.11