Exceptionally weak global trade growth over recent years has presented a puzzle to academics and policymakers alike. This column presents a study by an expert network across European central banks which suggests that it may actually be the past strength of trade which was exceptional, rather than the subsequent slowdown. The recent deceleration of trade growth can thus be seen as a ‘great normalisation’. The important implication is that an upturn in aggregate demand will not necessarily lead to a significant recovery in global trade.
Alexander Al-Haschimi, Martin Gächter, David Lodge, Walter Steingress, 14 October 2016
Andrea Ariu, 03 October 2016
During the Global Crisis, trade in goods collapsed dramatically. Surprisingly, however, trade in services continued its upward trend. This column discusses how goods and services exporters reacted to the crisis and suggests that services exports are less sensitive to income shocks in destination countries.
Emine Boz, Matthieu Bussière, Clément Marsilli, 12 November 2014
The past three years have witnessed a slowdown in global trade. This column shows that the slowdown was particularly pronounced in advanced economies, especially the Eurozone. In a panel of 18 OECD economies, most of the slowdown can be explained by cyclical factors. However, structural factors – global value chains and especially protectionism – may have played a role too.
Michael Ferrantino, Daria Taglioni, 06 April 2014
Recent growth in trade has decelerated significantly since its sharp recovery in 2010. This column discusses the role of global value chains in international trade and their contribution to the trade slowdown. Trade in complex products organised by global value chains, in particular motor vehicles, has been more sensitive to global downturn than has trade in simple products. Thus, either focusing on simpler products less dependent on global value chains, or diversifying the export folios, could be useful in reducing the risk of a slowdown in global merchandise.
Dennis Novy, Alan Taylor, 19 March 2014
The recent global crisis hit output, but the decline in international trade was twice as big. Standard models of trade fail to account for the severity of the event. This column proposes a new model that argues the great trade collapse was due to uncertainty. The uncertainty lead firms to postpone orders. As a result, trade declined substantially more than production. Data from the US for the past 50 years show quantitatively large effects of uncertainty shocks on the trade.
Gita Gopinath, Oleg Itskhoki, Brent Neiman, 30 September 2012
This paper documents the behaviour of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the US Bureau of Labor Statistics. The authors' findings present a challenge for theories of the trade collapse based on cost shocks specific to traded goods that work through prices.
Gita Gopinath, Oleg Itskhoki, Brent Neiman, 28 July 2012
The sharp decline in trade values during the recent global recession has captured the attention of both policymakers and academics. This column presents recent research sowing that, within differentiated sectors, the great collapse was one of trade quantities and not one of trade prices.
Matthieu Bussière, Fabio Ghironi, Giulia Sestieri, 14 February 2012
At the height of the 2008–09 financial crisis, global trade fell by far more than global output – a pattern that defied past experience and became known as the Great Trade Collapse. This column uses a new model for analysis to argue that the collapse was caused mainly by the crash in global demand.
Moonsung Kang, Soonchan Park, 04 September 2011
How have South Korean trade flows responded to the financial crisis of 2008-09? This column, part of a collection of four columns on trade responses to the crisis, finds that although relatively few antidumping duties were initiated, the Korea Trade Commission was more active in imposing these duties.
Pol Antràs, Foley Fritz, 29 July 2011
International trade flat-lined in the immediate aftermath of the global crisis, and many practitioners suggested that trade finance played an important role. Yet research has lagged behind policymaking, largely due to a lack of data detailing the financing of international transactions. This columns explores a US poultry exporter's trade-finance practices to pluck out some policy recommendations.
Daniel Paravisini, Veronica Rappoport, Philipp Schnabl, Daniel Wolfenzon, 27 July 2011
On the back of the global crisis came the global trade collapse, as international trade fell 15% between 2008 and 2009. Was this a result of credit lines being cut or did demand simply disappear? This column uses Peruvian export data to argue that bank credit played a smaller role than suggested by previous estimates.
Uri Dadush, Shimelse Ali, Rachel Odell, 07 June 2011
The limited resort to protectionism during the financial crisis is often attributed to the WTO or to sensible macroeconomic policy. This column argues that there is more to the story. The combination of national laws, regional agreements, and powerful interest groups has worked to stop protectionism in its tracks.
Filippo di Mauro, Benjamin Mandel, 05 May 2011
Has the global crisis changed international trade forever? This column presents a Q&A on global trade taken from a new eBook from the European Central Bank: “Recovery and Beyond”.
Peter van Bergeijk, 22 March 2011
The recent global crisis was accompanied by the Great Trade Collapse – the sharpest and deepest fall in world trade since the Second World War. While the subject has received much attention on this site, this column argues that scholars have not invested enough in comparing it to the previous world trade collapse of the 1930s. It does so, highlighting the importance of country-specific variables that have been neglected.
Karen-Helene Ulltveit-Moe, Andreas Moxnes, 01 October 2010
The great trade collapse during the global crisis has opened a new chapter in trade debate. This column uses evidence from a real-exchange-rate shock in Norway to show how firms initially slowed down or postponed the introduction of new products to the market. It argues that this sort of response suggests a long and difficult recovery from the global trade collapse – unless policymakers intervene.
Mona Haddad , Ann Harrison, Catherine Hausman, 27 August 2010
The great trade collapse that accompanied the global crisis was historically severe. This column presents evidence from several countries suggesting that the great trade collapse was more concentrated along the intensive margin – the reduction in the value of goods already being traded – providing hope that trade may recover sooner than feared.
Jonathan Eaton, Samuel Kortum, John Romalis, Brent Neiman, 07 July 2010
The great trade collapse during the global crisis has reignited interest in the relationship between trade and GDP over the business cycle. This column argues that trade patterns in the recent recession largely reflected the shift away from demand for durable goods, although increasing trade frictions did play a moderate role in some countries.
Hiau Looi Kee, Cristina Neagu, Alessandro Nicita, 01 June 2010
Did increased protectionism cause the great trade collapse? This column argues that, while there has been a rise in the use of tariffs and anti-dumping duties, protectionism accounted for no more than 2% of the drop in world trade in 2009.
Richard Baldwin, 27 November 2009
World trade experienced a sudden, severe, and synchronised collapse in late 2008 – the sharpest in recorded history and deepest since WWII. This ebook – written for the world's trade ministers gathering for the WTO's Trade Ministerial in Geneva – presents the economics profession's received wisdom on the collapse. Two dozen chapters, written by leading economists from across the globe, summarise the latest research on the causes of the collapse as well as its consequences and the prospects for recovery. According to the emerging consensus, the collapse was caused by the sudden, severe and globally synchronised postponement of purchases, especially of durable consumer and investment goods (and their parts and components). The impact was amplified by “compositional” and “synchronicity” effects in which international supply chains played a central role.
Lionel Fontagné, Guillaume Gaulier, 27 November 2009
Detailed firm-level data on French exporters suggests most of the trade collapse occurred in exporters’ volumes rather than the number of exporters. Small exporters suffered similarly to their larger counterparts. There is clear evidence that the impact was greatest on firms in sectors that rely most heavily on external finance. Thus, the crisis may not have long-lasting effects on aggregate export capacity – the reservoir of small and promising firms has not been decimated– but firms may reorganise to reduce vulnerability to external financing.