The adjustment effect of the extensive margin on the terms of trade during economic crises

摘要

Variations in trade flows after economic crises are largely explained by the destruction and creation of trade varieties. This paper investigates the adjustment effect of the extensive margin on the terms of trade of South Korea, which witnessed large trade variations during the 1997 Asian and 2008 global crises. We demonstrate that the conventional terms of trade suffered severely because of ignoring the changes in trade varieties during the economic crises. (C) 2018 Elsevier B.V. All rights reserved.