Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009
- (pp. 118-51)
Abstract
This paper introduces a new empirical model of international trade flows based on an import intensity-adjusted measure of aggregate demand. We compute the import intensity of demand components by using the OECD Input-Output tables. We argue that the composition of demand plays a key role in trade dynamics because of the relatively larger movements in the most import-intensive categories of expenditure (especially investment, but also exports). We provide evidence in favor of these mechanisms for a panel of 18 OECD countries, paying particular attention to the 2008-2009 Great Trade Collapse.Citation
Bussière, Matthieu, Giovanni Callegari, Fabio Ghironi, Giulia Sestieri, and Norihiko Yamano. 2013. "Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009." American Economic Journal: Macroeconomics, 5 (3): 118-51. DOI: 10.1257/mac.5.3.118Additional Materials
JEL Classification
- E23 Macroeconomics: Production
- F14 Empirical Studies of Trade
- F17 Trade: Forecasting and Simulation
- F44 International Business Cycles
- G01 Financial Crises
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