How Does Trade Evolve in the Aftermath of Financial Crises?
Electronic Access:
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Summary:
We analyze trade dynamics following past episodes of financial crises. Using an augmented gravity model and 179 crisis episodes from 1970-2009, we find that there is a sharp decline in a country’s imports in the year following a crisis-19 percent, on average-and this decline is persistent, with imports recovering to their gravity-predicted levels only after 10 years. In contrast, exports of the crisis country are not adversely affected, and they remain close to the predicted level in both the short and medium-term.
Series:
Working Paper No. 2011/003
Subject:
Banking crises Econometric analysis Exports Financial crises Gravity models Imports International trade
English
Publication Date:
January 1, 2011
ISBN/ISSN:
9781455211814/1018-5941
Stock No:
WPIEA2011003
Pages:
54
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