Showing posts from November, 2010

One is not enough. Understanding world trade collapse. Luncheon presentation at the Peterson Institute, Monday November, 29, 2010

The world trade collapse that started in October 2008 and reduced global trade by some twenty per cent in only a few months time remains one of the most puzzling phenomena of the last decade. In mid-2009 a consensus amonst trade economists appeared to have emerged. The concensus can be summarized in two ways. Many economists argue that the trade collapse was a demand shock multiplied by a composition effect (the 2009 edited volume by Richard Baldwin is an example). The other view in the profession (of which the WTO in 2009 is an example) is that the trade collapse was caused by protectionism, lacking trade finance and the fragmentation of production in international value chains (the latter incidentally is seen to be a driver of composition effects). My problem with both representations of the consensus is that they are based on empirical analyses of post Second World War data only. Economists typically do not include the Black Swan of the 1930s in their analysis. This would seem to
Ref.: Ms. No. IEEP-D-10-00038 International Value Chains and The World Trade Collapse: A Cross-Country Perspective International Economics and Economic Policy Dear prof dr van bergeijk, Reviewer's comments on your work have now been received. You will see that it is advising against publication of your work. Therefore I must reject it. For your guidance, I append the reviewer's comments below. Thank you for giving us the opportunity to consider your work. Yours sincerely Thomas Domeratzki Editorial Assistant International Economics and Economic Policy Reviewer's comments: Reviewer: Summary The paper "International Value Chains and the World Trade Collapse: A Cross Country Perspective" examines the role of vertical value chains in the trade collapse of 2008/09. Using a cross-country estimation, the decrease in imports between 2008-2009 is regressed on the degree of vertical value chains (as measured by (i) manufacturing products in total im