The Great Trade Collapse

Rudolfs Bems · Robert C. Johnson · Kei‐Mu Yi

69 citations0/0 files storedNational Bureau of Economic Research

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Global trade and economics Monetary Policy and Economic Impact Global Financial Crisis and Policies

Abstract

We survey recent literature on the causes of the collapse in international trade during the 2008-2009 global recession.We argue that the evidence points to the collapse in aggregate expenditure, concentrated on trade-intensive durable goods, as the main driver of the trade collapse.Inventory adjustment likely amplified the impact of these expenditure changes on trade.In addition, shocks to credit supply constrained export supply further exacerbating the decline in trade.Most evidence suggests that changes in trade policy did not play a large role.We conclude that one benefit of the trade collapse is that it has stimulated research in neglected areas at the intersection of trade and macroeconomics.

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References

2007Business Cycle Accounting 2009Exports and Financial Shocks 2011Off the cliff and back? Credit conditions and international trade during the global financial crisis 2013Exports and Credit Constraints under Incomplete Information: Theory and Evidence from China 2014Dissecting the Effect of Credit Supply on Trade: Evidence from Matched Credit-Export Data 2010The Collapse of International Trade during the 2008–09 Crisis: In Search of the Smoking Gun 2009FIRMS AND THE GLOBAL CRISIS FRENCH EXPORTS IN THE TURMOIL 1 20091 Trade Booms, Trade Busts, and Trade Costs*

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