Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-09

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

No 17712, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper introduces a new methodology for the estimation of demand trade elasticities based on an import intensity-adjusted measure of aggregate demand, with the foundation of a stylized theoretical model. 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 large 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 2008-09 Great Trade Collapse.

JEL-codes: F10 F15 F17 F4 (search for similar items in EconPapers)
Date: 2011-12
New Economics Papers: this item is included in nep-int
Note: IFM ITI
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Citations: View citations in EconPapers (36)

Published as Matthieu Bussière & Giovanni Callegari & Fabio Ghironi & Giulia Sestieri & Norihiko Yamano, 2013. "Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 118-51, July.

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Journal Article: Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009 (2013)
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