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Trade Prices and the Global Trade Collapse of 2008-2009

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Listed:
  • Gopinath, Gita
  • Itskhoki, Oleg
  • Neiman, Brent
Abstract
We document the behavior of trade prices during the Great Trade Collapse of 2008-2009 using transaction-level data from the U.S. Bureau of Labor Statistics. First, we fi nd that di fferentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-diff erentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among diff erentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, the frequency and magnitude of price adjustments at the product level changed with the onset of the crisis, consistent with a state-dependent view of price adjustment. The quantitative magnitudes of the changes, however, were not pronounced enough to affect aggregate prices. Our findings present a challenge for theories of the trade collapse based on cost shocks specific to traded goods that work through prices.

Suggested Citation

  • Gopinath, Gita & Itskhoki, Oleg & Neiman, Brent, 2012. "Trade Prices and the Global Trade Collapse of 2008-2009," CEPR Discussion Papers 9158, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9158
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    More about this item

    Keywords

    Durable goods; Global trade collapse; Great recession; Import and export prices;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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