THE GREAT TRADE COLLAPSE: AN EVALUATION OF COMPETING STORIES

The reduction in international trade has been more than the reduction in economic activity during the 2008 financial crisis, against the one-to-one relationship between them implied by standard trade models. This so-called the Great Trade Collapse (GTC) has been investigated extensively in the literature resulting in alternative competing stories as potential explanations. By introducing and estimating a dynamic stochastic general equilibrium model using 18 quarterly series from the USA, including those that represent the competing stories, this paper evaluates the contribution of each story to GTC. The results show that retail inventories have contributed the most to the collapse and the corresponding recovery, followed by protectionist policies, intermediate-input trade, and trade finance. Productivity and demand shocks have played negligible roles.

Complex internationalization strategies and firm export performance during the great trade collapse

Purpose Focusing on the global trade collapse and the subsequent recovery period, the purpose of this paper is to examine the export performance of firms that are involved in complex internationalization strategies. Design/methodology/approach The authors use a random-effects probit model with panel data and a dynamic panel data model (GMM system) for Spanish manufacturing firms from 2006 to 2013 period. Findings It is found that, once firm characteristics are controlled for, complex internationalization plays an important role in continuing to export and, additionally, positively influences the level of exports. Firms active in a complex mix of internationalization strategies have an added advantage, which enables them to confront the uncertainty of foreign markets in better conditions and translates to a lower likelihood of ceasing exporting and to higher export values. Practical implications The present paper throws light on this question by showing that the negative impact of trade collapse in 2009 on the export level was lower for firms inserted in complex internationalization strategies and the subsequent recovery was more intense. Originality/value The analysis goes one step further and investigates whether the impact is different during the trade collapse in 2009 and the following recovery. Here, previous empirical research at firm level on the role of complex internationalization strategies in trade is contradictory.