Quality and the Great Trade Collapse

Author/Editor:

Natalie Chen ; Luciana Juvenal

Publication Date:

February 18, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

We explore whether the global financial crisis has had heterogeneous effects on traded goods differentiated by quality. Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, we show that higher quality exports grew faster before the crisis, but this trend reversed during the recession. Quantitatively, the effect is large: up to nine percentage points difference in trade performance can be explained by the quality composition of exports. This flight from quality was triggered by a fall in aggregate demand, was more acute when households could substitute imports by domestic alternatives, and was stronger for smaller firms' exports.

Series:

Working Paper No. 2016/030

Subject:

Export performance Exports Financial crises Imports International trade National accounts Real exports

English

Publication Date:

February 18, 2016

ISBN/ISSN:

9781498347587/1018-5941

Stock No:

WPIEA2016030

Pages:

59

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