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

Matthieu Bussiere, Giovanni Callegari, Fabio Ghironi, Giulia Sestieri and Norihiko Yamano

American Economic Journal: Macroeconomics, 2013, vol. 5, issue 3, 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.

JEL-codes: E23 F14 F17 F44 G01 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mac.5.3.118
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Citations: View citations in EconPapers (170)

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Working Paper: Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-09 (2011)
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