Time to Ship during Financial Crises
Chapter in NBER book NBER International Seminar on Macroeconomics 2012 (2013), Francesco Giavazzi and Kenneth D. West, organizers (p. 225 - 260)
We show that the negative impact of financial crises on trade is magnified for destinations with longer time- to- ship. A simple model where exporters react to an increase in the probability of default of importers by increasing their export price and decreasing their export volumes to destinations in crisis is consistent with this empirical finding. For longer shipping time, those effects are indeed magnified as the probability of default increases as time passes. Some exporters also decide to stop exporting to the crisis destination, the more so the longer time-to-ship. Using aggregate data from 1950 to 2009, we find that this magnification effect is robust to alternative specifications, samples, and inclusion of additional controls, including distance. The firm level predictions are also broadly consistent with French exporter data from 1995 to 2005.
Document Object Identifier (DOI): 10.1086/669587This chapter first appeared as NBER working paper w18274, Time to Ship During Financial Crises, Nicolas Berman, José De Sousa, Philippe Martin, Thierry Mayer
Commentary on this chapter:
Comment, Hélène Rey
Comment, Cédric Tille
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