Nicolas Berman, José De Sousa, Philippe Martin, Thierry Mayer, 20 October 2012

With the Global Crisis came the Great Trade Collapse, a fall in world trade much larger than the fall in GDP. This column argues that one reason behind this is that time to ship magnifies the effect of financial crises on trade. The reason is that exporters react to the increased probability of default even more so the longer the time to ship.

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