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Quality and the Great Trade Collapse
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Chen, Natalie and Juvenal, Luciana (2018) Quality and the Great Trade Collapse. Journal of Development Economics, 135 . pp. 59-76. doi:10.1016/j.jdeveco.2018.06.012 ISSN 0304-3878.
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Official URL: https://doi.org/10.1016/j.jdeveco.2018.06.012
Abstract
We investigate theoretically and empirically the heterogeneous effects of the global financial crisis on international trade flows differentiated by quality. Our model, which identifies the effect of quality on trade that arises on the demand side, through the relationship between income and quality choice, predicts that a negative income shock disproportionately reduces the demand for higher relative to lower quality traded goods (a “flight from quality”). Using a unique dataset of firm-level wine exports for an emerging market economy, Argentina, combined with experts wine ratings as a measure of quality, we find strong evidence of a flight from quality as we show that the values, volumes, unit values, and markups of higher quality exports contracted more sharply during the crisis. Our results imply that the exports of countries producing higher quality goods are likely to collapse more severely during recessions.
| Item Type: | Journal Article | ||||||
|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management | ||||||
| Divisions: | Faculty of Social Sciences > Economics | ||||||
| Library of Congress Subject Headings (LCSH): | Wine industry -- Argentína, Development economics, Exports, Financial crises | ||||||
| Journal or Publication Title: | Journal of Development Economics | ||||||
| Publisher: | Elsevier | ||||||
| ISSN: | 0304-3878 | ||||||
| Official Date: | 27 June 2018 | ||||||
| Dates: |
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| Volume: | 135 | ||||||
| Page Range: | pp. 59-76 | ||||||
| DOI: | 10.1016/j.jdeveco.2018.06.012 | ||||||
| Status: | Peer Reviewed | ||||||
| Publication Status: | Published | ||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||
| Date of first compliant deposit: | 26 June 2018 | ||||||
| Date of first compliant Open Access: | 27 June 2020 | ||||||
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