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The Composition and Cyclical Behavior of Trade Flows in Emerging Economies

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  • Reinout De Bock

Abstract

The composition and cyclical properties of imports are similar in developed economies and emerging economies (EM) but this is not the case for exports. Unlike developed economies, (i) EM export few or only a selective set of capital goods and (ii) capital good and overall exports tend to be acyclical. The lack of procyclicality in exports helps to explain the strong countercyclicality of EM trade balances observed in previous studies. A quantitative exercise demonstrates how the standard small open economy business cycle model could be improved upon by incorporating some of these features.

Suggested Citation

  • Reinout De Bock, 2012. "The Composition and Cyclical Behavior of Trade Flows in Emerging Economies," International Economics, CEPII research center, issue 132, pages 5-33.
    • Handle: RePEc:cii:cepiie:2012-q4-132-1
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    Cited by:

    1. Boileau, Martin & Normandin, Michel, 2017. "The price of imported capital and consumption fluctuations in emerging economies," Journal of International Economics, Elsevier, vol. 108(C), pages 67-81.
    2. Le Riche, Antoine & Lloyd-Braga, Teresa & Modesto, Leonor, 2022. "Intra-industry trade, involuntary unemployment and macroeconomic stability," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    3. Carlos A. Ibarra, 2011. "Capital flows, real exchange rate, and growth constraints in Mexico," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 653-668, November.
    4. Mario Holzner & Marina Tkalec & Goran Vukšić, 2019. "Composition of trade flows and the effectiveness of fiscal devaluation," The World Economy, Wiley Blackwell, vol. 42(2), pages 453-477, February.
    5. Reinout De Bock, 2011. "The Cost of Volatile Investment in an Emerging Economy," Economics Bulletin, AccessEcon, vol. 31(2), pages 1696-1705.
    6. Mr. Reinout De Bock & Mr. Alexander Demyanets, 2012. "Bank Asset Quality in Emerging Markets: Determinants and Spillovers," IMF Working Papers 2012/071, International Monetary Fund.
    7. Lance Kent, 2014. "Bilateral Linkages and the International Transmission of Business Cycles," Working Papers 149, Department of Economics, College of William and Mary.

    More about this item

    Keywords

    International Real Business Cycles; Small Open Economy; Emerging Economy; Trade Balance;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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