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The author examines the impact of historical global downturns on trade flows. The results provide insight into why trade has dropped so dramatically in the current crisis, what is likely to happen in the coming years, how global imbalances are affected, and which regions and industries suffer most heavily. The author finds that the elasticity of global trade volumes to real world GDP has increased gradually from around 2 in the 1960s to above 3 now. The author also finds that trade is more responsive to GDP during global downturns than in tranquil times. The results suggest that the overall drop in real trade this year is likely to exceed 15 percent. There is significant variation across industries, with food and beverages the least affected and crude materials and fuels the most affected. On the positive side, trade tends to rebound very rapidly when the outlook brightens. The author also finds evidence that global downturns often lead to persistent improvements in the ratio of the trade balance to GDP in borrower countries.

Base year --- Currencies and Exchange Rates --- Debt --- Economic Theory and Research --- Elasticity --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Financial crises --- Financial crisis --- Forecasts --- Free Trade --- GDP --- Gross value --- Growth rate --- Income --- International Economics & Trade --- International trade --- Inventories --- Law and Development --- Macroeconomics and Economic Growth --- Middle income countries --- Private Sector Development --- Public Sector Development --- Real GDP --- Real income --- Tax revenues --- Trade balance --- Trade Law --- Trade Policy --- Trough --- Value added

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

The author examines the impact of historical global downturns on trade flows. The results provide insight into why trade has dropped so dramatically in the current crisis, what is likely to happen in the coming years, how global imbalances are affected, and which regions and industries suffer most heavily. The author finds that the elasticity of global trade volumes to real world GDP has increased gradually from around 2 in the 1960s to above 3 now. The author also finds that trade is more responsive to GDP during global downturns than in tranquil times. The results suggest that the overall drop in real trade this year is likely to exceed 15 percent. There is significant variation across industries, with food and beverages the least affected and crude materials and fuels the most affected. On the positive side, trade tends to rebound very rapidly when the outlook brightens. The author also finds evidence that global downturns often lead to persistent improvements in the ratio of the trade balance to GDP in borrower countries.

Base year --- Currencies and Exchange Rates --- Debt --- Economic Theory and Research --- Elasticity --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Financial crises --- Financial crisis --- Forecasts --- Free Trade --- GDP --- Gross value --- Growth rate --- Income --- International Economics & Trade --- International trade --- Inventories --- Law and Development --- Macroeconomics and Economic Growth --- Middle income countries --- Private Sector Development --- Public Sector Development --- Real GDP --- Real income --- Tax revenues --- Trade balance --- Trade Law --- Trade Policy --- Trough --- Value added

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• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

This paper examines the short- and long-run economic impact of Egypt's energy subsidy reform in July 2014 (without and without compensating transfers for the bottom 40 percent of the income distribution) and the decline in global energy prices, as well as the long-run impact of phasing out the energy subsidies over a 5 year period. The analysis uses a Computable General Equilibrium model with 56 productive sectors, including 11 energy subsectors. The short-run analysis employs a two-stage factor market adjustment, with wages first fixed and then flexible. The long-run analysis is run in a recursive dynamic mode, capturing the impact of improved productivity and increased investment resulting from more efficient allocation of resources and reduction in government deficits. In the short run, the 2014 reforms lead to slightly lower consumption while investment increases strongly and production shifts from highly subsidized energy-intensive sectors such as energy, water and sanitation, and transport to other sectors (notably construction). The impact on overall consumer prices is limited. In the longer run, real GDP growth increases by about one percentage point relative to the baseline before the 2014 reform.

Activities --- Adverse Impact --- Agriculture --- Approach --- Balance --- Balance of Payments --- Base Year --- Benchmark --- Budget Deficits --- Capital --- Capital Use --- Cement --- Coal --- Consumers --- Consumption --- Controlled Prices --- Cost of Energy --- Costs --- Crude Oil --- Crude Oil Production --- Development Policy --- Diesel --- Diesel Fuel --- Distribution of Energy --- Domestic Energy --- Domestic Natural Gas --- Dry Natural Gas --- Dynamic Analysis --- Economic Efficiency --- Economic Implications --- Economic Performance --- Economic Sectors --- Economic Theory & Research --- Elasticities --- Elasticity --- Electric Power --- Electric Power Generation --- Electric Power Plants --- Electricity --- Electricity Generation --- Electricity Prices --- Employment --- Energy --- Energy and Environment --- Energy Costs --- Energy Extraction --- Energy Prices --- Energy Production and Transportation --- Energy Products --- Energy Use --- Environment --- Environment and Energy Efficiency --- Equilibrium --- Exports --- Fixed Prices --- Fuel --- Fuel Oil --- Fuel Subsidies --- Full Employment --- Gas --- Gas Output --- Gas Prices --- Gas Producer --- Gasoline --- GDP --- Generation --- Goods --- Government Expenditures --- Government Subsidies --- Growth Rate --- High Energy --- Higher Energy Prices --- Incentives --- Income --- Income Groups --- Inputs --- International Trade --- Investment --- LNG --- Macroeconomic Performance --- Macroeconomics --- Macroeconomics and Economic Growth --- Measurement --- Mobility --- Natural Gas --- Natural Gas Output --- Natural Gas Prices --- Natural Gas Pricing --- Oil --- Oil Exporters --- Oil Price --- Oil Producer --- Oil Production --- Oil Products --- Payments --- Petroleum --- Petroleum Products --- Power --- Power Generation --- Power Plants --- Power Sector --- Price --- Price Changes --- Price Elasticities --- Price Subsidies --- Prices --- Production Costs --- Productivity Growth --- Real GDP --- Refined Petroleum Products --- Sanitation --- Static Analysis --- Subsidy --- Tax --- Tax Revenue --- Total Costs --- Total Factor Productivity --- Total Factor Productivity Growth --- Trade --- Trade Balance --- Trade Deficit --- Transport --- Transport Costs --- Transport Economics Policy and Planning --- Transportation --- Utilities --- Value --- Value Added --- Wage Rates --- Wages --- Water