Working Paper: NBER ID: w16006
Authors: Andrei A. Levchenko; Logan T. Lewis; Linda L. Tesar
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. We find 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% 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, we find that sectors used as intermediate inputs experienced significantly higher percentage reductions in both imports and exports. We also find support for compositional effects: sectors with larger reductions in domestic output had larger drops in trade. By contrast, we find no support for the hypothesis that trade credit played a role in the recent trade collapse.
Keywords: international trade; economic crisis; trade collapse; vertical linkages; compositional effects
JEL Codes: F41; F42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in domestic output (F69) | Larger reductions in trade (F19) |
| Trade credit reliance (F14) | Trade flow reductions (F14) |
| Trade volumes (F10) | Domestic absorption (F35) |
| Reduction in trade (F19) | Reduction in domestic output (F69) |