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|Contents|Page|
|---|---|
|I. Introduction ....................................................................................................................|........4|
|II. The Global Trade Slowdown: Some Stylized Facts .....................................................|........7|
|III. An Analysis of the Trade-Income Relationship ...........................................................|........9|
|A. Trade and Income in 1970-2013: Annual Data .................................................<br>|......10<br>|
|B. Trade and Income Before and After the Great Recession: Quarterly Data .......|......12|
|IV. The Global Trade Slowdown in Retrospect and Prospect ...........................................<br>|......13<br>|
|A. Cyclical versus Structural Factors .....................................................................|......14|
|B. Trade Projections...............................................................................................|......16|
|V. Factors Explaining the Decline in Trade Elasticity ......................................................|......18|
|A. A Regional Decomposition of the Long-run Trade Elasticity ..........................|......19|
|B. Changes in the Composition of World Trade ....................................................|......20|
|C. Changes in Vertical Specialization ...................................................................|......21|
|D. Changes in the Composition of Aggregate Demand .........................................|......24|
|E. Changes in Protectionism ..................................................................................|......25|
|VI. Conclusion ...................................................................................................................|......26|
|References ..........................................................................................................................|......29|
|Tables||
|1. Results of Estimations Using Yearly Data.....................................................................|......40|
|2. Results of Estimations Using Quarterly Data ................................................................|......40|
|3. Decomposition of Trade Growth ...................................................................................|......41|
|4. Trade Predictions ...........................................................................................................|......41|
|5. Long Run Elasticity of Imports to GDP, by Country and Region .................................|......43|
|6. Long Run Elasticity of Imports to GDP, by Type of Imports .......................................|....432|
|7. Assessing the Impact of Protectionism on Long Run Elasticity of Imports to GDP .....|......43|
|Figures<br>||
|1. Total World Trade, Volumes and Growth Rates ...........................................................|......34|
|2. Total Import Volumes ................................................................................................|......34|
|3. Total Export Volumes ....................................................................................................|......35|
|4. Share of Import Volumes in Real GDP .........................................................................|......35|
|5. Average Growth Rates Across Selected Periods ...........................................................|......36|
|6. Decomposition of Trade Growth ...................................................................................|......36|
|7. Trade Predictions ...........................................................................................................|......37|
|8. China’s Share of Imports of Parts and Components in Total Exports of Merchandise .|......37|
|9. Manufacturing Imports ..................................................................................................|......38|
|10. Ratio of Foreign Value Added to Domestic Value Added in World GrossExports..|......38|
|11. Long Run Elasticities, 7-year periods ..........................................................................|......39|
|12. Share of Real Investment and Consumption in World Real GDP ...............................|......39|