Trade in capital goods and the volatility of net exports and the terms of trade

Boileau, Martin

doi:10.1016/s0022-1996(98)00054-3

Cited by 49 publications

(46 citation statements)

References 11 publications

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“…Stockman and Tesar (1995) highlight the importance of shocks to intertemporal preferences while Boileau (1999) and Engel and Wang (2011) Erceg, Guerrieri, and Gust (2008), and Jacob and Peersman (2013).…”

Section: Macroeconomics and Tradementioning

confidence: 99%

Trade and the Global Recession

Kortum²,

et al. 2011

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as well as participants at numerous seminars for helpful comments. George Alessandria, Chris Edmond, Tim Kehoe, Andrei Levchenko, Kanda Naknoi, Denis Novy, Andy Rose, Jonathan Vogel, and Kei-Mu Yi gave excellent discussions. Max Perez Leon, Fernando Parro, and Kelsey Moser provided outstanding research assistance. This research was funded in part by the Neubauer Family Foundation and the Charles E. Merrill Faculty Research Fund at the University of Chicago Booth School of Business. Eaton and Kortum gratefully acknowledge the support of the National Science Foundation under grant number SES-0820338. Neiman gratefully acknowledges the support of the National Science Foundation under grant number 1061954. The Appendix that accompanies the paper, as well as notes and derivations from a simplified version of the model, can be found on the authors' web pages. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.© 2011 by Jonathan Eaton, Samuel Kortum, Brent Neiman, and John Romalis. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. ABSTRACTWe develop a dynamic multi-country general equilibrium model to investigate forces acting on the global economy during the Great Recession and ensuing recovery. Our multi-sector framework accounts completely for countries' trade, investment, production, and GDPs in terms of different sets of shocks. Applying the model to 21 countries, we investigate the 29 percent drop in world trade in manufactures during [2008][2009]. A shift in final spending away from tradable sectors, largely caused by declines in durables investment efficiency, account for most of the collapse in trade relative to GDP. Shocks to trade frictions, productivity, and demand play minor roles.

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Section: Macroeconomics and Tradementioning

confidence: 99%

Trade and the Global Recession

Kortum²,

et al. 2011

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“…We assume that the elasticity of substitution between the durable and nondurable consumption is low (ζ = 1.1). 18 The adjustment cost 16 9.1 × 46% + 6.85 × 54% ≈ 7.9. 17 The data are from Haver Analytics (US International Transactions).…”

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confidence: 99%

International Trade in Durable Goods: Understanding Volatility, Cyclicality, and Elasticities

Engel¹,

Wang²

2008

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Data for OECD countries document: 1. imports and exports are about three times as volatile as GDP; 2. imports and exports are pro-cyclical, and positively correlated with each other; 3. net exports are counter-cyclical. Standard models fail to replicate the behavior of imports and exports, though they can match net exports relatively well. Inspired by the fact that a large fraction of international trade is in durable goods, we propose a two-country two-sector model, in which durable goods are traded across countries. Our model can match the business cycle statistics on the volatility and comovement of the imports and exports relatively well. The model is able to match many dimensions of the data, which suggests that trade in durable goods may be an important element in open-economy macro models. JEL Classifications: E32 F3 F4

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“…To address these compositional issues, we focus on an absorption measure where most trade occurs (goods-only component of GDP). To address compositional issues within goods (i.e., durable vs. non-durable) emphasized by Boileau (1999), Engel andWang (2011), andBussiere, Callegari, Ghironi, Sestieri, andYamano (2013), we extend the analysis below to control for differences in the share of durable goods between absorption and imports.…”

Section: Measurement Issuesmentioning

confidence: 99%

“…One concern is that observations O.1-3 reflect compositional effects of the sort described by many authors, e.g., Boileau (1999), Engel andWang (2011), Eaton, Kortum, Neiman, andRomalis (2016), Levchenko, Lewis, and Tesar (2010). The argument is based on the fact that a larger fraction of imports is classified as durable than in, say, absorption of total goods.…”

Section: Durables and Inventoriesmentioning

confidence: 99%

International Trade and Intertemporal Substitution

Leibovici

Waugh

2017

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------------------------------------This paper quantitatively investigates the extent to which variation in the intertemporal marginal rate of substitution can help account for puzzling features of cyclical fluctuations of international trade volumes. Our insight is that, because international trade is time-intensive, variation in the rate at which agents are willing to substitute across time affects how trade volumes respond to changes in output and prices. We use a standard small open economy model with time-intensive international trade, calibrated to match key features of U.S. data and disciplining the variation in the intertemporal marginal rate of substitution using asset price data. We find that variation in the intertemporal marginal rate of substitution helps rationalize puzzling features of import fluctuations and that this mechanism is quantitatively important during both normal and crisis times.--

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Trade in capital goods and the volatility of net exports and the terms of trade

Cited by 49 publications

References 11 publications

Trade and the Global Recession

Trade and the Global Recession

International Trade in Durable Goods: Understanding Volatility, Cyclicality, and Elasticities

International Trade and Intertemporal Substitution

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