Economics and Business Review

ISSN 2392-1641
e-ISSN 2450-0097

Poznań University of Economics - Poland

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Volume 1 (15) Number 2 pp. 76-94

Udo Broll, Julia Jauer

School of International Studies (ZIS), Technische Universität Dresden, Faculty of Business and Economics, Germany

International trade in differentiated goods, financial crisis and the gravity equation

Abstract:

The study examines the effect of financial crises on international trade with
a gravity equation approach. We use a large data set covering almost 70 importing and
200 exporting countries from 1950 to 2009. Thus it is possible to put the ‘Great Trade
Collapse’ witnessed during the financial crisis 2008–2009 into a historical perspective.
Both the period for which the crisis is observed, and the level of the trading partners’
economic development constitute important factors in explaining the negative effects
of a banking crisis on international trade. As the analysis indicates financial crises have
a stronger negative effect on differentiated goods compared to overall export flows. In
addition the negative effects of financial crises persist even after the income effect is
accounted for. The study therefore suggests that the increasing share of differentiated
goods in international trade might be one possible reason for the comparatively large
effect of the recent financial crisis on international trade relative to previous financial
turmoil in post-war economic history.

pub/2015_2_76.pdf Full text available in in Adobe Acrobat format:
http://www.ebr.edu.pl/volume15/issue2/2015_2_76.pdf
Keywords: international trade, differentiated goods, globalization, financial crisis, gravity equation

DOI: 10.18559/ebr.2015.2.4

For citation:

MLA Broll, Udo, and Julia Jauer. "International trade in differentiated goods, financial crisis and the gravity equation." Economics and Business Review EBR 15.2 (2015): 76-94. DOI: 10.18559/ebr.2015.2.4
APA U., B., & J., J. (2015). International trade in differentiated goods, financial crisis and the gravity equation. Economics and Business Review EBR 15(2), 76-94 DOI: 10.18559/ebr.2015.2.4
ISO 690 BROLL, Udo, JAUER, Julia. International trade in differentiated goods, financial crisis and the gravity equation. Economics and Business Review EBR, 2015, 15.2: 76-94. DOI: 10.18559/ebr.2015.2.4