The recent deceleration of world trade has been widely discussed, and many argue the relationship between trade and GDP growth is undergoing a fundamental shift. This column presents a novel framework to account for changes in the import intensity of global demand. Import intensity rose between 2000 and 2008 due to high demand for durables and to international production fragmentation. After 2011, fragmentation stopped and demand shifted to services, in particular in China. Low trade ratios are likely to persist in the near future.
Marcel Timmer, Bart Los, Robert Stehrer, Gaaitzen De Vries, 21 November 2016
Manuel Funke, Moritz Schularick, Christoph Trebesch, 21 November 2015
Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. This column uses a new dataset that covers elections and crises in 20 advanced economies going back to 1870 to systematically study the political aftermath of financial crises. Far-right parties are the biggest beneficiaries of financial crises, while the fractionalisation of parliaments complicates post-crisis governance. These effects are not observed following normal recessions or severe non-financial macroeconomic shocks.
Robert Johnson, Guillermo Noguera, 22 July 2012
The internationalisation of supply chains has been revolutionising international trade and trade policy for years. This column argues that expansion of international supply chains helps explain the so-called ‘distance paradox’, i.e. the fact that geography is still a powerful shaper of trade patterns despite declines in transport costs. It also argues that trade policy has played a prominent role in driving the expansion of global supply chains.
Hubert Escaith, Marcel Timmer, 13 May 2012
Global value chains and the international fragmentation of production challenge well-established trade policy models and raise new issues. Yet research has been hindered by the limited availability of proper statistics. This column introduces the World Input-Output Database (WIOD), a new public data source that offers unique opportunities to study the effects of fragmentation on a range of socioeconomic and environmental issues.
Hans Degryse, Frank de Jong, Vincent van Kervel, 24 November 2011
Financial innovation has brought about several new ways to trade equities: electronically, over-the-counter, through broker-dealer networks, and so on. But not all of the transactions are transparent, with many barely visible to outsiders – a practice known as ‘dark’ trades. This column finds that, in general, more ways to trade is a benefit, except when the trades are dark.