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Trade Finance and the Great Trade Collapse

Jae Bin Ahn; Mary Amiti; David E. Weinstein

Title:
Trade Finance and the Great Trade Collapse
Author(s):
Ahn, Jae Bin
Amiti, Mary
Weinstein, David E.
Date:
Type:
Working papers
Department:
Center on Japanese Economy and Business
Permanent URL:
Series:
Center on Japanese Economy and Business Working Papers
Part Number:
298
Abstract:
Economic models that do not incorporate financial frictions only explain about 70 to 80 percent of the decline in world trade that occurred in the 2008-2009 crisis. We review evidence that shows financial factors also contributed to the great trade collapse and uncover two new stylized facts in support of it. First, we show that the prices of manufactured exports rose relative to domestic prices during the crisis. Second, we show that US seaborne exports and imports, which are likely to be more sensitive to trade finance problems, saw their prices rise relative to goods shipped by air or land.
Subject(s):
Economics, Commerce-Business
Finance
Item views:
515
Metadata:
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