Can large trade shocks cause crises? The case of the Finnish–Soviet trade collapse

Adam Gulan, Markus Haavio and Juha Kilponen

Journal of International Economics, 2021, vol. 131, issue C

Abstract: We study the macroeconomic consequences of a major trade disruption using the example of the Finnish–Soviet trade collapse in 1991. This is a rare case of a well–identified large trade shock in a developed economy. We find that the shock significantly affected Finnish output. Even so, the trade collapse was insufficient to generate an all–out crisis, and accounts for only a part of the Finnish Great Depression (1990–1993). We show that shocks originating domestically played a major role throughout the depression.

Keywords: Trade shock; Great depressions; Small open economy (search for similar items in EconPapers)
JEL-codes: E32 E44 O52 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:131:y:2021:i:c:s002219962100057x

DOI: 10.1016/j.jinteco.2021.103480

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