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Crisis Shocks and Global Trade Excessive Adjustment: A Theoretical Analysis
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TitleCrisis Shocks and Global Trade Excessive Adjustment: A Theoretical Analysis  
AuthorDai Xiang and Zhang Erzhen  
OrganizationSchool of Economics , Nanjing University; 
Key WordsCrisis Shocks; Trade Excessive Adjustment; Production Fragmentation 
AbstractGlobal trade excessive adjustment to this round of global crisis shocks can’t be explained by the traditional factors like lumpy demand, crunch of trade finance and trade protectionism. This paper argues that the kind of phenomena is closely related to characteristic of current international labor division. International fragmentation of production has broken the production process of same production into more and more stages, thus, global value chain have been extended. Therefore, the effect of stock adjustment of intermediates will magnify through this value chain and lead to global trade excessive volatility eventually. The above conclusion means that, for one hand, to strengthen cooperation among nations aiming to promote healthy development of trade is the only effective way to cope with crisis shocks and realize recovery of economic growth; on the other hand, we should not exaggerate the negative impact degree of crisis shock on economic development, to the extent that missing the great opportunity for economic development that open-oriented economic development model can bring in certain stage of economic development.  
Serial NumberWP162 
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