Why World Exports are so Susceptible to the Economic Crisis --The Prevailing "Export Overshooting" Phenomenon

This paper provides some evidence of the "export overshooting" phenomenon, i.e., the unusually large deviation of exports from their long-run level. We study the export trends of a sample of 37 countries including both OECD and non-OECD countries over the period of 1994-2009. We find that exports overshot their equilibrium value during economic crises and that the tendency to overshoot was a worldwide phenomenon. The bullwhip effect was the driving force behind such a phenomenon. Moreover, the extent of export overshooting was increasing in more recent crisis, which can be attributed to an increase in cross-border vertical specialization over time.