The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun
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TLDR
The authors used disaggregated data on U.S. imports and exports to shed light on the anatomy of the recent economic collapse and found that the recent reduction in trade relative to overall economic activity is far larger than in previous downturns.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.read more
Figures
Figure 10. The Evolution of Trade Credit 
Figure 7. Consumption and Investment Wedges 
Figure 5. Real and Nominal Changes in Trade, by Sector 
Figure 3. Durables and Non-Durables Trade 
Table 1. Changes in Exports/GDP and Imports/GDP during Recessions 
Table 9. Compositional Effects: Change in Trade Flows as Implied by Industrial Production.
Citations
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References
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