This paper introduces a new empirical model of international trade
flows based on an import intensity-adjusted measure of aggregate
demand. We compute the import intensity of demand components by
using the OECD Input-Output tables. We argue that the composition
of demand plays a key role in trade dynamics because of the relatively
larger movements in the most import-intensive categories of expenditure
(especially investment, but also exports). We provide evidence
in favor of these mechanisms for a panel of 18 OECD countries,
paying particular attention to the 2008-2009 Great Trade Collapse.
Bussière, Matthieu, Giovanni Callegari, Fabio Ghironi, Giulia Sestieri, and Norihiko Yamano.
"Estimating Trade Elasticities: Demand Composition and the Trade Collapse of 2008-2009."
American Economic Journal: Macroeconomics,
Empirical Studies of Trade
Trade: Forecasting and Simulation
International Business Cycles