Prachi Mishra, an economist in the research department of the International Monetary Fund, lectured Monday in Eggers Hall, explaining her newest research project, which examined the effects a country’s imports and exports face after a debt or banking crisis.

In October 2010, Mishra, along with two colleagues, put together the report ‘How Does Trade Evolve in the Aftermath of Financial Crises?’ The research takes samples of data from 170 documents in 153 countries and is spread out over the past 40 years. 

The report, cited as a Working Paper, is still a work-in-progress and does not reflect the views of the IMF, according to the report.

To clarify the report’s findings, Mishra defined trade as ‘imports and exports of all goods from a certain country, excluding services.’ Crises were said to be a banking or debt crisis or emergency.

The research team attempted to avoid data from the current economic crisis to better focus on crises in the past 40 years, Mishra said.

‘Since the mid-1970s, both debt and banking crises have been relatively frequent, continuing a pattern that extends back to at least the start of the 19th century,’ according to the report. ‘So it comes as no surprise that the effects of financial crises have been studied extensively.’ 

By using various economic calculations to find the flow of people, goods or communication between any two places and comparing their outcomes with supportive graphs, the research team found results that Mishra described as unexpected. 

‘Crises tend to depress imports for several years, but there is little effect on exports,’ Mishra said. 

The report concludes, ‘On average, in the year following a crisis, imports of the crisis country are 19 percent lower. … Imports recover slowly, taking roughly 10 years to return to normal. In contrast, exports of the crisis country are not as adversely affected. On average, exports are 4 percent below predicted in the year of the crisis and return to normal within one year.’

In addition to the main find from the research, the graphs also proved imports from smaller, less powerful countries were hit harder after an economic downturn when compared to larger countries. Although she and her colleagues are unsure why this is, Mishra said, it is worth investigating. 

‘Understanding the behavior of trade is very crucial,’ Mishra said. 

Adrienne Muldoon, an undecided freshman in the S.I. Newhouse School of Public Communications, was one of the few students who attended the lecture. She said she went to receive extra credit for her public policy class. 

‘I thought it was boring, but I do understand a little more about importing and exporting and the effect they have on the economy and the national debt,’ Muldoon said. ‘I have also realized that I don’t want to pursue economics in college.’ 

About 20 people, the majority of whom were adults, attended the lecture. Muldoon said it was evident the only people in the room who had read the report were the teachers who were present because they were the ones actively engaged in the speech, making it harder for her to follow along. 

‘It was a good presentation nonetheless,’ Muldoon said. ‘She definitely knew what she was talking about.’

klross01@syr.edu

 

Published on December 6, 2010 at 12:00 pm

Contact Kristin: klross01@syr.edu | @kriskross22