Relationship stickiness, international trade, and economic uncertainty

Julien Martin, Isabelle Mejean () and Mathieu Parenti ()
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Isabelle Mejean: Institut d'Études Politiques [IEP] - Paris, CEPR - Center for Economic Policy Research

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Abstract: We study how stickiness in business relationships influences the trade impact of aggregate uncertainty. To begin, we construct a product-level index of relationship stickiness using firm-to-firm relationship duration data. We then demonstrate how relationship stickiness shapes trade dynamics in response to uncertainty shocks.We find that episodes of uncertainty lead to a decline in the overall establishment of new business relationships, with the impact varying depending on the level of stickiness. In markets characterized by high stickiness, uncertainty shocks primarily impede investments in new firm-to-firm relationships. In contrast, for non-sticky products, the adjustment to uncertainty shocks mainly manifests as the disruption of existing relationships.

Date: 2024-10
New Economics Papers: this item is included in nep-int
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Related works:
Working Paper: Relationship stickiness, international trade, and economic uncertainty (2024)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2023)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2023)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2023)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2021)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2021)
Working Paper: Relationship Stickiness, International Trade, and Economic Uncertainty (2021)
Working Paper: Relationship stickiness, international trade, and economic uncertainty (2020)
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