6½ Decades of Global Trade and Income: “New Normal” or “Back to Normal” after GTC and GFC?

July 12, 2016

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Format: Chicago

Sanjay Kalra. 6½ Decades of Global Trade and Income: “New Normal” or “Back to Normal” after GTC and GFC?, (USA: International Monetary Fund, 2016) accessed November 21, 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

Global merchandise trade expanded rapidly over the last 6½ decades and its relationship with global income has seen ebbs and flows. This paper examines the shifts in this relationship using time series data over 1950-2014 and situates it in the current and longer term context. The conjunctural context comes from, among other things, the “great trade collapse” (GTC) and the global financial crisis (GFC) in 2009, and developments since then. The longer term context comes from the relative role of “globalization” and “technology” shocks in accounting for the short and long run variance of global exports and income. The paper estimates trade and income elasticities using ADL models taking account of structural breaks, and impulse response functions from structural VARs. The estimated SVAR model provides a lens to ask whether global trade and income are in a “new normal’ or only “back to (an old) normal” after the GTC and GFC.

Subject: Econometric analysis, Export performance, Exports, International trade, National accounts, Personal income, Structural vector autoregression, Vector autoregression

Keywords: Determinant resid covariance, Eastern Europe, Elasticities, Export performance, Export value, Exports, Exports to income, Global, Global export, Global Trade and Income, Globalization, Least squares, Merchandise export, Personal income, Structural breaks, Structural vector autoregression, SVAR, Technology shocks, Trade financing constraint, Trade slowdown, Trade-income relationship, Vector autoregression, WP

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/139
Stock No:

WPIEA2016139
ISBN:

9781475526592
ISSN:

1018-5941

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