Working Paper: NBER ID: w18632
Authors: Rudolfs Bems; Robert C. Johnson; Keimu Yi
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.
Keywords: international trade; global recession; expenditure changes; financial shocks; trade policy
JEL Codes: F1; F14; F17; F4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decreased final expenditure (E20) | decreased imports (F14) |
| financial shocks (F65) | decreased exports (F14) |
| changes in trade policy (F13) | trade collapse (F19) |