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N°293 |
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| 23 october 2009 |
| Crisis and Trade: Bad Times for High Quality |
Antoine Berthou
Charlotte Emlinger |
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| Similar products are imported at different prices, suggesting that varieties are vertically differentiated between low and
high quality. This differentiation of varieties according to their quality enables to provide new evidence regarding the
collapse of world trade during the recent crisis. The decrease of world demand has affected the imports of high quality
varieties to a larger extent, leading to a decrease of import prices. Our econometric estimations over a period of ten years
confirm that the revenue elasticity of import quantity is larger for high quality imports. Hence, a decrease of world
revenue is expected to decrease more the world imports of high quality as compared with the imports of low quality. To
the contrary, recovery should benefit more to the imports of high quality. |
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