Trade Booms, Trade Busts, and Trade Costs

By D. Jacks, Christopher M. Meissner, D. Novy. Social Science Research Network, 2011

333 citations recorded by the source corpus.

What has driven trade booms and trade busts in the past and present? We derive a micro-founded measure of trade frictions from leading trade theories and use it to gauge the importance of bilateral trade costs in determining international trade flows. We construct a new balanced sample of bilateral trade flows for 130 country pairs across the Americas, Asia, Europe, and Oceania for the period from 1870 to 2000 and demonstrate an overriding role for declining trade costs in the pre-World War I trade boom. In contrast, for the post-World War II trade boom we identify changes in output as the dominant force. Finally, the entirety of the interwar trade bust is explained by increases in trade costs.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f2c88a54e632f3cbe1444d881e0440d8bc6e4e13

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Citations in the corpus

In Search of the Armington Elasticity (2014, positive): “This “two step”estimation procedure is possible because relative demand between two importing countries– used to obtain (25)– is separable from home country demand and does not rely on ω and ρ3, Therefore, we can substitute the first-step estimates of σ̂gand ρ̂1g into (22) and therefore (24) to obta”
The Wind of Change: Maritime Technology, Trade and Economic Development (2017, background): “1 In Krugman (1991), external economies arise from the desire of firms to establish their facilities close to customers/workers; in Krugman and Venables (1995), externalities arise from linkages between firms; and in Baldwin, Martin and Ottaviano (2001), externalities arise from capital accumulation”
Trade Crisis? What Trade Crisis? (2013, neutral): “* Behrens: Université du Québec à Montrëal CIRPEE, and CEPR; Corcos: Norwegian School of Economics and Business Administration; Mion: London School of Economics, CEP, CEPR, and SERC.”
Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade (2017, methodology): “In Section VIA, we have already mentioned the measurement of trade costs, which is an important application of gravity models: see, e.g., Anderson and van Wincoop (2004) and Jacks, Meissner, and Novy (2011).”
A Portrait of Trade in Value-Added over Four Decades (2017, neutral): “The reason is that this rise in the services share is largely accounted for in the model by the complementarity between manufactures and non(14)In the main body of the paper, Jacks et al. use country-level GDP data to measure production (and hence domestic trade). In Appendix B of their paper, they ”