Trade Booms, Trade Busts, and Trade Costs

44 Pages Posted: 9 Sep 2009

See all articles by David S. Jacks

David S. Jacks

Simon Fraser University (SFU) - Department of Economics; National Bureau of Economic Research (NBER)

Christopher M. Meissner

University of California, Davis

Dennis Novy

University of Warwick; Centre for Economic Policy Research (CEPR); Centre for Economic Performance (CEP); CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2009

Abstract

What has driven trade booms and trade busts in the past and present? We derive a micro-founded measure of trade frictions from leading trade theories and use it to gauge the importance of bilateral trade costs in determining international trade flows. We construct a new balanced sample of bilateral trade flows for 130 country pairs across the Americas, Asia, Europe, and Oceania for the period from 1870 to 2000 and demonstrate an overriding role for declining trade costs in the pre-World War I trade boom. In contrast, for the post-World War II trade boom we identify changes in output as the dominant force. Finally, the entirety of the interwar trade bust is explained by increases in trade costs.

JEL Classification: F10, F15, N10, N70

Suggested Citation

Jacks, David S. and Meissner, Christopher M. and Novy, Dennis, Trade Booms, Trade Busts, and Trade Costs (August 2009). CESifo Working Paper Series No. 2767. Available at SSRN: https://ssrn.com/abstract=1469978

David S. Jacks

Simon Fraser University (SFU) - Department of Economics ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christopher M. Meissner

University of California, Davis ( email )

One Shields Avenue
Davis, CA 95616
United States

Dennis Novy (Contact Author)

University of Warwick ( email )

Department of Economics
Coventry CV4 7AL
United Kingdom
+44 (0) 2476150046 (Phone)

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/economics/staff/faculty/novy/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
46
Abstract Views
3,808
PlumX Metrics