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Forecasting the Great Trade Collapse

Author

Listed:
  • Hakan Yilmazkuday

    (Department of Economics, Florida International University)

Abstract

This paper introduces a simple methodology to forecast international trade. The main innovation is to calculate non-unitary expenditure elasticities of import demand implied by non-homothetic preferences in the previous year to be further combined with the current change in expenditure to forecast the current imports. Using U.S. data on aggregate expenditure and good-level imports, we test the performance of the methodology in forecasting international imports. The methodology is successful in forecasting not only the Great Trade Collapse and the corresponding recovery period but also the other periods in the sample.

Suggested Citation

  • Hakan Yilmazkuday, 2016. "Forecasting the Great Trade Collapse," Working Papers 1603, Florida International University, Department of Economics.
    • Handle: RePEc:fiu:wpaper:1603
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    References listed on IDEAS

    as
    1. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "Inventories, Lumpy Trade, and Large Devaluations," American Economic Review, American Economic Association, vol. 100(5), pages 2304-2339, December.
    2. Kristian Behrens & Gregory Corcos & Giordano Mion, 2013. "Trade Crisis? What Trade Crisis?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 702-709, May.
    3. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2016. "Trade and the Global Recession," American Economic Review, American Economic Association, vol. 106(11), pages 3401-3438, November.
    4. Emmanuel Sirimal Silva & Hossein Hassani, 2015. "On the use of singular spectrum analysis for forecasting U.S. trade before, during and after the 2008 recession," International Economics, CEPII research center, issue 141, pages 34-49.
    5. Behrens, Kristian & Murata, Yasusada, 2007. "General equilibrium models of monopolistic competition: A new approach," Journal of Economic Theory, Elsevier, vol. 136(1), pages 776-787, September.
    6. repec:cii:cepiie:2015-q1-141-30 is not listed on IDEAS
    7. repec:cii:cepiei:2015-q1-141-3 is not listed on IDEAS
    8. Rudolfs Bems & Robert C. Johnson & Kei-Mu Yi, 2013. "The Great Trade Collapse," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 375-400, May.
    9. Rudolfs Bems & Robert C Johnson & Kei-Mu Yi, 2010. "Demand Spillovers and the Collapse of Trade in the Global Recession," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 58(2), pages 295-326, December.
    10. Andrei A Levchenko & Logan T Lewis & Linda L Tesar, 2010. "The Collapse of International Trade during the 2008–09 Crisis: In Search of the Smoking Gun," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 58(2), pages 214-253, December.
    11. Matthieu Bussière & Giovanni Callegari & Fabio Ghironi & Giulia Sestieri & Norihiko Yamano, 2013. "Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(3), pages 118-151, July.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Forecasting the Great Trade Collapse
      by Hakan Yilmazkuday in Hakan Yilmazkuday's Blog on 2016-06-10 20:26:00

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    More about this item

    Keywords

    Great Trade Collapse; Non-Homothetic Preferences; Forecasting;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

    NEP fields

    This paper has been announced in the following NEP Reports:

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