US trade and inventory dynamics

George Alessandria, Joseph P. Kaboski, Virgiliu Midrigan

    Research output: Contribution to journalArticlepeer-review


    We examine the source of the large fall and rebound in US trade in the recent recession. While trade fell and rebounded more than expenditures or production of traded goods, we find that relative to the magnitude of the downturn, these trade fluctuations were in line with those in previous business cycle fluctuations. We argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade. We present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings help explain these fluctuations in trade.

    Original languageEnglish (US)
    Pages (from-to)303-307
    Number of pages5
    JournalAmerican Economic Review
    Issue number3
    StatePublished - May 2011

    ASJC Scopus subject areas

    • Economics and Econometrics


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