Working Paper: CEPR ID: DP10931
Authors: Natalie Chen; Luciana Juvenal
Abstract: We explore whether the global financial crisis has had heterogeneous effects on traded goods differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, we show that higher quality exports grew faster before the crisis, but this trend reversed during the recession. Quantitatively, the effect is large: up to nine percentage points difference in trade performance can be explained by the quality composition of exports. This flight from quality was triggered by a fall in aggregate demand, was more acute when households could substitute imports by domestic alternatives, and was stronger for smaller firms' exports.
Keywords: exports; heterogeneity; multiproduct firms; quality; trade collapse; unit values; wine
JEL Codes: F10; F14; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Global financial crisis (F65) | flight from quality in Argentinean wine exports (L15) |
| Higher quality wines (L15) | stronger growth in nominal exports before the crisis (F69) |
| Global financial crisis (F65) | collapse in exports for higher quality wines (L66) |
| Higher quality wines (L15) | reduced export growth during the downturn (F69) |
| Drop in quantities (C69) | collapse in higher quality wine exports (L66) |
| Substitution of imported wines (L66) | more pronounced flight from quality (L15) |
| Sensitivity to aggregate demand changes (E00) | smaller firms more adversely affected (L25) |