Trade Prices and the Global Trade Collapse of 2008–2009

Date Published:

Abstract:

We document the behavior of trade prices during the Great Trade Collapse of 2008–2009 using transaction-level data from the US Bureau of Labor Statistics. First, we find that differentiated manufactures exhibited marked stability in their trade prices during the large decline in their trade volumes. Prices of non-differentiated manufactures, by contrast, declined sharply. Second, while the trade collapse was much steeper among differentiated durable manufacturers than among non-durables, prices in both categories barely changed. Third, despite this lack of movement in average price levels, the frequency and magnitude of price adjustments at the product level noticeably changed with the onset of the crisis.

Notes:

Co-author Oleg Itskhoki is a professor of economics at Princeton University. Co-author Brent Neiman is at the Booth School of Business at the University of Chicago.