Quality and the Great Trade Collapse

February 18, 2016

Preview Citation

Format: Chicago

Natalie Chen, and Luciana Juvenal. Quality and the Great Trade Collapse, (USA: International Monetary Fund, 2016) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We explore whether the global financial crisis has had heterogeneous effects on traded goods differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, we show that higher quality exports grew faster before the crisis, but this trend reversed during the recession. Quantitatively, the effect is large: up to nine percentage points difference in trade performance can be explained by the quality composition of exports. This flight from quality was triggered by a fall in aggregate demand, was more acute when households could substitute imports by domestic alternatives, and was stronger for smaller firms' exports.

Subject: Export performance, Exports, Financial crises, Imports, International trade, National accounts, Real exports

Keywords: Export growth, Export performance, Export value, Export volume, Exports, Financial crisis, Global, Heterogeneity, Imports, Multi-product firms, Quality, Quality export, Real exports, Trade collapse, Unit value, Unit values, Wine, Wine export, WP

Publication Details

Pages:

59
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/030
Stock No:

WPIEA2016030
ISBN:

9781498347587
ISSN:

1018-5941

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