Working Papers, Department of Economics, Lund University
Exploring the Duration of EU Imports
() and Maria Persson
Abstract: The objective of this paper is twofold. First, against the
background of an existing empirical literature on the duration of trade
which has found that international trade is often of strikingly short
duration, we aim to establish whether or not EU imports from the rest of
the world also are short-lived. Second, since there is at this point no
clear commonly accepted theoretical explanation for these short trade
durations, we seek to provide a thorough empirical description and analysis
of the phenomenon, with the intention of thereby facilitating theoretical
developments on the subject. We employ a rich data set of detailed imports
to the EU15 countries from 140 exporters, covering the time period
1962-2006. Using these data, we begin by conducting a thorough descriptive
analysis of the duration of EU imports. Thereafter, we perform a regression
analysis using discrete-time duration models with proper controls for
unobserved heterogeneity. We draw the conclusion that EU imports are indeed
very short-lived – in fact, possibly more so than, for example, US imports.
The median duration of EU imports is for example merely one year, and
almost 60 percent of all spells cease during the first year of service.
Among our empirical findings are (i) that the duration of trade remains
stable across the long time period that we study; (ii) that short trade
durations are the result of at least two processes: countries shifting
between different suppliers but continuing to import a given product, and
countries ceasing to import the product altogether; and (iii) that
countries with a diversified export structure also will tend to have more
long-lived export flows. In our formal regression, we are also able to find
a set of explanatory variables that have statistically significant effects
on the probability that trade flows die.
Keywords: Duration of Trade; Survival; European Union; Discrete-Time Hazard Models; (follow links to similar papers)
JEL-Codes: C41; F10; F14; (follow links to similar papers)
29 pages, April 29, 2010
- This paper is forthcoming as:
Hess, Wolfgang and Maria Persson, 'Exploring the Duration of EU Imports', Review of World Economics.
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