Economic Crisis and Global Supply Chains

Bénassy‐Quéré, Agnès; Decreux, Yvan; Fontagné, Lionel; Khoudour-Castéras, David

doi:10.2139/ssrn.1588946

Cited by 26 publications

(19 citation statements)

References 6 publications

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“…(I-A)-1] is a linear combination of fixed coefficients, the ratio (Δm IC / Δq) is a constant, and trade elasticity is 1. This results is consistent with the critics advanced by Bénassy-Quéré et al (2009) against the hypothesis of the large trade multiplier observed during the crisis being attributed to supply chains and vertical integration.…”

Section: As Seen Insupporting

confidence: 92%

“…Other experts, nevertheless, contest the hypothesis that higher demand elasticity behind the Great Trade Collapse could have been caused by vertical integration (Bénassy-Quéré et al, 2009) because it affects only the relative volume of trade in relation to GDP (levels), while elasticity should remain constant in a general equilibrium context. The data compiled from national accounts data on Asian economies and the USA since 1990 (Table 3) confirms the positive relationship between export orientation (share of export over total output) and reliance on imported inputs.…”

Section: As Seen Inmentioning

confidence: 99%

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International Supply Chains and Trade Elasticity in Times of Global Crisis

2010

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Abstract:The paper investigates the role of global supply chains in explaining the trade collapse of [2008][2009] and the long-term variations observed in trade elasticity. Building on the empirical results obtained from a subset of input-output matrices and the exploratory analysis of a large and diversified sample of countries, a formal model is specified to measure the respective short-term and long-term dynamics of trade elasticity. The model is then used to formally probe the role of vertical integration in explaining changes in trade elasticity. Aggregated results on long-term trade elasticity tend to support the hypothesis that world economy has undertaken in the late 1980s a "traverse" between two underlying economic models. During this transition, the expansion of international supply chains determined an apparent increase in trade elasticity. Two supply chains related effects (the composition and the bullwhip effects) explain also the overshooting of trade elasticity that occurred during the 2008-2009 trade collapse. But vertical specialization is unable to explain the heterogeneity observed on a country and sectoral level, indicating that other contributive factors may also have been at work to explain the diversity of the observed results.

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Section: As Seen Insupporting

confidence: 92%

Section: As Seen Inmentioning

confidence: 99%

International Supply Chains and Trade Elasticity in Times of Global Crisis

2010

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“…Meanwhile, our work is also closely related to Bems, Johnson and Yi (2010) -Castéras (2009), the fragmentation of the production process can actually amplify the impact of demand shocks and justify elasticities to production bigger than one in presence of asymmetric shocks across countries and sectors. Our work di¤ers from theirs on several grounds.…”

Section: Introductionmentioning

confidence: 89%

Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008–2009

Bussière

Callegari

Ghironi

et al. 2013

American Economic Journal: Macroeconomics

140

118

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This paper introduces a new methodology for the estimation of income trade elasticities based on an import intensity-adjusted measure of aggregate demand. It provides an empirical illustration of this new approach for a panel of 18 OECD countries, paying particular attention to the 2008-09 Great Trade Collapse, which standard empirical trade models fail to account for. In this paper, we argue that the composition of demand plays a key role in the collapse of trade during crises because of a relatively bigger fall in the most import-intensive categories of expenditure (especially investment, but also private consumption), which has a large downward impact on the quantity of imports from the rest of the world. In addition, the fragmentation of production implies high import content of exports and, in turn, strongly synchronized trade ‡uctuations across countries. We provide evidence in favor of these factors based on the analysis of the new OECD input-output tables and building on a stylized theoretical model. Importantly, we show that our new intensityweighted measure of demand outperforms alternative measures, during crises but also in normal times, providing import elasticities of demand that are much less volatile across the cycle. JEL Codes: F10, F15, F17.

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“…This trade collapse was wide-ranging across industries and highly synchronized across OECD countries (Araújo & Martins, 2009). The trade fall also exceeded that of world GDP and the fall that a computable general equilibrium model or a simple IRBC model would predict (Benassy-Quéré et al 2009;Levchenko, Lewis, & Tesar, 2010).…”

Section: Introductionmentioning

confidence: 96%

Trade Crisis? What Trade Crisis?

Behrens

Corcos

Mion

2013

Review of Economics and Statistics

230

166

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Abstract-We investigate the 2008-2009 trade collapse using microdata from a small open economy, Belgium. Belgian exports and imports mostly fell because of smaller quantities sold and unit prices charged rather than fewer firms, trading partners, and products being involved in trade. Our difference-in-difference results point to a fall in the demand for tradables as the main driver of the collapse. Finance and involvement in global value chains played a minor role. Firm-level exports-to-turnover and imports-tointermediates ratios reveal a comparable collapse of domestic and crossborder operations. Overall, our results reject a crisis of cross-border trade per se.

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Economic Crisis and Global Supply Chains

Cited by 26 publications

References 6 publications

International Supply Chains and Trade Elasticity in Times of Global Crisis

International Supply Chains and Trade Elasticity in Times of Global Crisis

Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008–2009

Trade Crisis? What Trade Crisis?

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