The Sectoral Trade Losses from Financial Crises

By Jean-Marc B. Atsebi, Jean-Louis Combes, Alexandru Minea

June 25, 2021

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Jean-Marc B. Atsebi, Jean-Louis Combes, and Alexandru Minea. The Sectoral Trade Losses from Financial Crises, (USA: International Monetary Fund, 2021) accessed December 26, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The “Great Trade Collapse” triggered by the 2008-09 crisis calls for a careful assessment of the trade losses from financial crises. We adopt a more detailed perspective by looking at the response of different types of trade (i.e. agricultural, mining, and manufactured goods, and services) following various types of financial crises (i.e. debt, banking, and currency crises). Estimations performed on the 1980-2018 period using a combination of impact assessment and local projections to capture a causal dynamic effect running from financial crises to the trade activity show that the collapse of total trade is long-lasting and mainly driven by the fall of manufacturing and to some extent services trade. These causal effects are found to operate through three channels: a structural, a demand-side, and a supply-side channel. By contributing to the understanding of the trade effects of financial crises, our analysis provides insightful support for the design and implementation of policies aimed at coping with these effects.

Subject: Banking crises, Currency crises, Exports, Financial crises, Imports, International trade

Keywords: Banking crises, Caribbean, Currency crises, Exports, Global, Imports, Losses from financial crises, Mining trade, Trade activity, Trade effect, Trade loss

Publication Details

Pages:

87
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/176
Stock No:

WPIEA2021176
ISBN:

9781513586731
ISSN:

1018-5941

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