The global trade slowdown: cyclical or structural ?

Ileana Cristina Constantinescu, Aaditya Mattoo, Michele Ruta, Ileana Cristina Constantinescu, Aaditya Mattoo and Michele Ruta
Authors registered in the RePEc Author Service: Michele Ruta, Aaditya Mattoo and Ileana Cristina Neagu

No 7158, Policy Research Working Paper Series from The World Bank

Abstract: This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of gross domestic product, but also because of a structural change in the trade-gross domestic product relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and gross domestic product.

Keywords: International Trade and Trade Rules; Food&Beverage Industry; General Manufacturing; Construction Industry; Common Carriers Industry; Pulp&Paper Industry; Textiles; Apparel&Leather Industry; Plastics&Rubber Industry; Business Cycles and Stabilization Policies; Trade and Services; Economics and Finance of Public Institution Development; Public Sector Administrative&Civil Service Reform; De Facto Governments; Democratic Government; State Owned Enterprise Reform; Public Sector Administrative and Civil Service Reform; Energy and Environment; Energy and Mining; Energy Demand (search for similar items in EconPapers)
Date: 2015-01-01
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (66)

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Related works:
Journal Article: The Global Trade Slowdown: Cyclical or Structural? (2020)
Working Paper: The Global Trade Slowdown: Cyclical or Structural? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7158

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