Trade Finance and Its Role in the Great Trade Collapse

Author:JaeBin Ahn
Pages:1-4
SUMMARY

The Great Recession stimulated research on many issues that had been overlooked previously in the profession. Trade finance is one of the best examples of these issues. Although trade finance has served as the primary driver of international transactions for centuries, it received its due attention from academic researchers and policymakers only after the Great Recession that was accompanied by... (see full summary)

 
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IMF
Volume 14, Number 1 March 2013
www.imf.org/researchbulletin
B U L L E T I N
1
Sovereign Debt: How to Track Who Is Buying
and Selling It?
Serkan Arslanalp and Takahiro Tsuda
Recent events have shown that sovereigns, just
like banks, can be subject to runs. Hence, it pays
to know who holds their liabilities. This article
explains the construction of a dataset on inves-
tor holdings of sovereign debt to track investor
demand for advanced economy sovereign debt. It
also discusses new risk indicators to capture both the vulnerability to and likelihood of
potential investor shifts and their domestic financial stability implications.
ere has been a lot of discussion about how the supply of sovereign debt
changed aer the globa l nancial crisis. C ompilation of the comprehensive histori-
cal public debt database by IM F economists reects such renewed interest in public
debt (Abbas and others, 2010). Yet, less attention has been paid to how the dema nd
side has been changing , although shis in the investor bas e for sovereign debt can
have signicant eect s on government borrowing costs, as rec ently witnessed in a
number of euro area countries.
Trade Finance and Its Role in the Great
Trade Collapse
JaeBin Ahn
The Great Recession stimulated research on many issues that
had been overlooked previously in the profession. Trade finance
is one of the best examples of these issues. Although trade
finance has served as the primary driver of international trans-
actions for centuries, it received its due attention from academic
researchers and policymakers only after the Great Recession that
was accompanied by what has been called the Great Trade Collapse. This article
summarizes recent research on trade finance, particularly the pattern of payment
methods and the role of trade finance in the Great Trade Collapse.
At the onset of the Great Recession, trig gered by the bankr uptcy of Lehman
Brothers, international tr ade fell much faster and more drast ically than GDP
worldwide, resulting in what ha s been labeled the Great Trade Collapse. Since
then, researchers have found that the i nherent nature of international trad e—
sectoral composition, vertic al linkages, lumpiness, and t rade nance—can lead
(continued on page 4)
In This Issue
1 Trade Finance and Its
Role in the Great Trade
Collapse
1 Sovereign Debt: How to
Track Who Is Buying and
Selling It?
7 Recommended
Readings
8 Q&A: Seven Questions on
the Implications of Global
Supply Chains for Real
Effective Exchange Rates
11 IMF Working Papers
14 Call for Papers
15 Staff Discussion
Notes
15 IMF Economic Review
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