How Does Trade Evolve in the Aftermath of Financial Crises?

We analyze trade dynamics following past episodes of financial crises. Using an augmented gravity model and 179 crisis episodes from 1970-2009, we find that there is a sharp decline in a country's imports in the year following a crisis-19 percent, on average-and this decline is persistent, with imports recovering to their gravity-predicted levels only after 10 years. In contrast, exports of the crisis country are not adversely affected, and they remain close to the predicted level in both the short and medium-term.
Publication date: January 2011
ISBN: 9781455211814
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Economics- Macroeconomics , Economics / General , International - Economics , exporter , trade flows , financial crises , trading partners , international trade , exporting countries , tariff equivalent , trade costs , world trade , bilateral trade flows , antidumping measures , export price , export flows , multilateral trade , aggregate imports , free trade , t

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