U.S. Trade and Inventory Dynamics
19 Pages Posted: 24 Jan 2011
Date Written: January 1, 2011
The authors examine the source of the large fall and rebound in U.S. trade in the recent recession. While trade fell and rebounded more than expenditures or production of traded goods, they find that relative to the magnitude of the downturn, these trade fluctuations were in line with those in previous business cycle fluctuations. The authors argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade. They present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings helps explain these fluctuations in trade.
JEL Classification: E31, F12
Suggested Citation: Suggested Citation