Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/81384 
Year of Publication: 
2011
Series/Report no.: 
IFN Working Paper No. 880
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Aiming to explore how the survival of trade flows has evolved over time, we analyze a rich data set of detailed imports to individual EU15 countries from 140 non-EU exporters, covering the period 1962-2006. We find that short duration is a persistent characteristic of trade throughout the extended time period that we study: in general only 40 percent of trade flows survive the first year of service, and this share has not changed much since the 1960s. However, this observed constancy is the result of two underlying trends that work in opposite directions. On the one hand, positive trends in several of the observed explanatory variables - which in turn influence the hazard of trade flows dying in a negative direction - imply that the hazard tends to decrease over calendar time. On the other hand, there is also a positive trend in the hazard due to calendar year-specific unobserved factors. Holding all observed determinants constant, the probability of a trade flow dying in its first year increases from 34% at the beginning of the period to 90% at the end.
Subjects: 
Duration of Trade
Survival
Entry and Exit
European Union
Discrete-Time Hazard Models
JEL: 
C41
F10
F14
Document Type: 
Working Paper

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