## Quality and the Great Trade Collapse

_IMF Working Papers, February 18, 2016_

## Source details

**Canonical URL:** [Quality and the Great Trade Collapse](https://www.imf.org/en/publications/wp/issues/2016/12/31/quality-and-the-great-trade-collapse-43714)

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## Bibliographic details
- Authors: Natalie Chen, Luciana Juvenal
- Published: February 18, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498347587.001

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### Summary / Main findings
- The study investigates whether the global financial crisis had heterogeneous effects on traded goods differentiated by quality.
- Combining a dataset of Argentinean firm-level destination-specific wine exports with quality ratings, the authors find:
  - Higher quality exports grew faster before the crisis, but this trend reversed during the recession.
  - The reversal constitutes a "flight from quality" during the crisis period.

### Quantitative impact
- The quality composition of exports can explain up to nine percentage points difference in trade performance.

### Mechanisms and contextual factors
- The flight from quality was triggered by a fall in aggregate demand.
- The effect was more acute when households could substitute imports by domestic alternatives.
- The flight from quality was stronger for smaller firms' exports.

### Data and scope
- Empirical analysis uses Argentinean firm-level destination-specific wine exports combined with quality ratings.
- Subject areas listed: Export performance, Exports, Financial crises, Imports, International trade, National accounts, Real exports.
- Keywords listed: export growth; Export performance; export value; export volume; Exports; financial crisis; Global; heterogeneity; Imports; multi-product firms; quality; quality export; Real exports; trade collapse; unit value; unit values; wine; wine export; WP.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/quality-and-the-great-trade-collapse-43714_