The Global Trade Slowdown : Cyclical or Structural?

This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An...

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Bibliographic Details
Main Authors:	Constantinescu, Cristina, Mattoo, Aaditya, Ruta, Michele
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2015
Subjects:	ADVANCED ECONOMIES AGGREGATE DEMAND ANTIDUMPING AVERAGE TRADE BENCHMARK BORDER MEASURES BUSINESS CYCLE BUSINESS CYCLE SYNCHRONIZATION BUSINESS CYCLES CAPITAL GOODS CENTRAL BANK COMMODITIES COMMODITY COMMUNICATION TECHNOLOGY CONSTANT ELASTICITY OF SUBSTITUTION COUNTERVAILING DUTIES CREDIT CONSTRAINTS CUSTOMS DEBT DEBT CRISIS DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT POLICY DOMESTIC DEMAND DOMESTIC INPUTS DURABLE GOODS ECONOMIC OUTLOOK ELASTICITY ELASTICITY OF SUBSTITUTION ELASTICITY OF TRADE EMERGING ECONOMIES EMERGING MARKETS ENDOGENOUS VARIABLES EQUILIBRIUM EUROPEAN UNION EXCHANGE RATE EXCHANGE RATES EXPORT GROWTH EXPORT SUBSIDIES EXPORT VOLUMES EXPORTERS EXPORTS FINAL GOODS FINANCIAL CRISES FINANCIAL CRISIS FORECASTS FOREIGN DIRECT INVESTMENT FOREIGN VALUE FUTURE PROSPECTS GDP GLOBAL TRADE GLOBALIZATION GROSS DOMESTIC PRODUCT GROSS EXPORTS GROWTH IN TRADE GROWTH RATE GROWTH RATES IMPORT LICENSES IMPORT PROTECTION IMPORT SHARE IMPORT VOLUME IMPORTS INCOME INCOME ELASTICITY OF DEMAND INDUSTRIALIZATION INTERNAL TRADE INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL PRODUCTION INTERNATIONAL TRADE INTERNATIONAL TRADE STATISTICS INVENTORY MACROECONOMIC DYNAMICS MACROECONOMICS NATIONAL INCOME POLICY RESEARCH PROTECTIONISM PROTECTIONIST PROTECTIONIST MEASURES RAPID EXPANSION REAL GDP RECESSION REGRESSION ANALYSIS SHARE OF WORLD TRADE SOVEREIGN DEBT STATISTICAL ANALYSIS STRUCTURAL CHANGE TRADE ALERT TRADE BARRIERS TRADE FLOWS TRADE INTEGRATION TRADE LIBERALIZATION TRADE MEASURES TRADE PERFORMANCE TRADE POLICIES TRADE PROJECTIONS TRADE REGIME TRADE RELATIONSHIP TRADE VOLUMES VALUE ADDED VERTICAL SPECIALIZATION VOLUME OF TRADE WAGES WORLD TRADE WORLD TRADE ORGANIZATION WTO
Online Access:	http://documents.worldbank.org/curated/en/2015/01/23179583/global-trade-slowdown-cyclical-or-structural http://hdl.handle.net/10986/21144

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Summary:	This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of gross domestic product, but also because of a structural change in the trade-gross domestic product relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and gross domestic product.

The Global Trade Slowdown : Cyclical or Structural?

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