American Economic Journal Macroeconomics · 2013 · 241 citations · 31 references
Social SciencesEconomicsEconometricsInternational EconomicsInternational TradeAggregate DemandInput-output AnalysisPanel Data AnalysisPanel Data MethodsTrade LiberalizationTrade PolicyAggregate Demand AnalysisAggregate Demand CurveCollapseImport ElasticitiesInternational Trade FlowsTrade Elasticity EstimationTrade Flows AnalysisTrade Intensity
This paper introduces a new empirical model of international trade flows based on an import intensity-adjusted measure of aggregate demand. We compute the import intensity of demand components by using the OECD Input-Output tables. We argue that the composition of demand plays a key role in trade dynamics because of the relatively larger movements in the most import-intensive categories of expenditure (especially investment, but also exports). We provide evidence in favor of these mechanisms for a panel of 18 OECD countries, paying particular attention to the 2008–2009 Great Trade Collapse. (JEL E23, F14, F17, F44, G01)
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