Free eBook: The Great Trade Collapse
Here’s a pretty interesting collection of essays prepared for trade ministers.
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Introduction (Via Vox.EU)
World trade experienced a sudden, severe and synchronised collapse in late 2008 – the sharpest in recorded history and deepest since WWII. VoxEU today posts a new Ebook – written for the world’s trade ministers gathering for the WTO’s Trade Ministerial in Geneva – that presents the economics profession’s received wisdom on the collapse. Two dozen chapters, written by leading economists from across the planet, summarise the latest research on the causes of the collapse as well as the consequences and prospects for recovery.
The two dozen chapters establish a consensus on what caused the collapse. In a nutshell, it was caused by the sudden postponement of purchases, especially of durable consumer and investment goods. Trade fell far more than GDP, since the demand shock was amplified by “compositional” and “synchronicity” effects.
- “Compositional effect”: In the 4th quarter of 2008 and 1st quarter of 2009, the Lehman-induced ‘fear factor’ caused consumers and firms around the world – but especially in the US and EU – to freeze; expenditures were postponed until things became clearer. The sales/production of “postponeables” plummeted, dragging down GDP growth rates. However, since the composition of GDP places much lower weight on postponeables than the composition of trade, the same shock had a substantially larger impact on trade than it did on GDP; the lion’s share of trade takes place in manufactures, mostly final durable consumer and investment goods, and related parts and components.
- “Synchronicity effect”: National drops in trade were large – many attaining post-war records – but the world trade drop was much larger than previous episodes, since almost every nation’s trade dropped sharply; there was no averaging out this time. The synchronisation was probably due to the global and instantaneous transmission of the ‘fear factor’, and partly due to the development of international supply chains that reacted “just in time” to the collapse in demand for postponeables.
Book Outline With Active Links To Chapters (Via Vox.Eu)
SECTION I: CAPSTONE ESSAYS
1.The dollar and the budget deficit
C. Fred Bergsten2. Prospects for the global trading system
Anne O. Krueger3. Global trade in the aftermath of the global crisis
Jeffry Frieden4. Government policies and the collapse in trade during the Great Depression
Kevin H. O’Rourke5. Crisis-era protectionism one year after the Washington G20 meeting
Simon J. Evenett6. The great trade collapse and trade imbalances
Richard Baldwin and Daria TaglioniSECTION II: CAUSES OF THE CRISIS
7. The trade response to global downturns
Caroline Freund
8. The collapse of US trade: in search of the smoking gun
Andrei A. Levchenko, Logan T. Lewis and Linda L. Tesar9. The collapse of global trade: update on the role of vertical linkages
Rudolfs Bems, Robert C. Johnson and Kei-Mu Yi10. Follow the bouncing ball – trade and the great recession redux
Joseph F. Francois and Julia Woerz11. Resilient to the crisis? Global supply chains and trade flows
Carlo Altomonte and Gianmarco I.P. Ottaviano12. The Great Synchronisation: tracking the trade collapse with high-frequency data
Joaquim Oliveira Martins and Sónia Araújo13. Banking crises and exports: lessons from the past for the recent trade collapse
Leonardo Iacovone and Veronika Zavacka14. Did trade credit problems deepen the great trade collapse?
Jesse Mora and William Powers15. US trade margins during the 2008 crisis
Peter K. Schott16. French exporters and the global crisis
Lionel Fontagné and Guillaume Gaulier
17. Services trade – the collapse that wasn’t
Ingo Borchert and Aaditya Mattoo18. The role of trade costs in the great trade collapse
David S. Jacks, Christopher M. Meissner and Dennis NovySection III: REGION AND COUNTRY EXPERIENCES
19. Transmission of the global recession through US trade
Michael J. Ferrantino and Aimee Larsen20. Africa and the trade crisis
Peter Draper and Gilberto Biacuana21. Africa, the trade crisis and WTO negotiations
Tonia Kandiero and Léonce Ndikumana
22. Trade collapse and international supply chains: Japanese evidence
Kiyoyasu Tanaka23. Why was Japan’s trade hit so much harder?
Ryuhei Wakasugi24. The Great Recession and India’s trade collapse
Rajiv Kumar and Dony Alex25. Mexico and the great trade collapse
Raymond Robertson
