Trade and Uncertainty

• 成果类型: Article
• 署名作者: Novy, Dennis; Taylor, Alan M.
• 署名单位: University of Warwick; Center for Economic & Policy Research (CEPR); University of California System; University of California Davis; National Bureau of Economic Research
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/rest_a_00885
• 发表日期: 2020-10
• 页码: 749-765
• 关键词: INTERNATIONAL-TRADE; Policy Uncertainty; collapse; CRISIS; INVESTMENT; IMPACT; irreversibility; inventories; exports; demand

摘要

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the idea of uncertainty shocks with international trade. Firms order inputs from home and foreign suppliers. In response to an uncertainty shock firms disproportionately cut orders of foreign inputs due to higher fixed costs. In the aggregate, this leads to a bigger contraction in international trade flows than in domestic activity, a magnification effect. We confront the model with newly compiled US import and industrial production data. Our results help to explain the Great Trade Collapse of 2008-2009.