The mystery of the weak growth of world trade after the global financial crisis


Hanna Armelius, Carl-Johan Belfrage and Hanna Stenbacka analyse why world trade has been so weak since 2008. One possible explanation is that the crisis has contributed to increased uncertainty regarding the future among households and companies, which has held back the provision of credit and trade. Another explanation is that the long-run globalisation trend prior to the crisis has slowed down, as a result of the crisis and new types of trade barriers, which may be difficult to measure. The authors use an econometric model that includes a globalisation trend, measures of financial stress and a new measure of economic policy uncertainty. They find empirical support for both explanations, but find the former, increased uncertainty, more appealing as it is somewhat more robust. If this is the case, world trade may recover faster when uncertainty over the future declines.


The article is included in this year's third issue of the Sveriges Riksbank Economic Review, which has been published today.



Hanna Armelius, Carl-Johan Belfrage and Hanna Stenbacka
The authors work at the Monetary Policy Department of the Riksbank.

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