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This article investigates cross‐market reallocation of trade to mitigate negative effects of large economic shocks. We propose a simple measure of trade reallocation and apply it to Norwegian exports during the great trade collapse following the financial crisis in 2008–2009. The results indicate statistically significant cross‐market reallocation of trade away from markets hit hard by the crisis as measured by GDP/growth. Norwegian exports declined by 16.9% from 2008 and 2009. Without reallocation, the decline would have been between 1.6 and 3.8 percentage points greater. Successful reallocation at the firm level is done primarily along the intensive margin, by shifting physical products towards less affected markets within their pre‐crisis trade networks. [ABSTRACT FROM AUTHOR]

Research on trade relationships has documented a high rate of relationship breakup and churning. We use data on Norwegian exports to document two stylized facts about the stability of trade relationships. First, the probability of relationship breakup increases in the deviation of the relationship‐specific price from a reference price. Second, relationship hazards follow Zipf's law. We propose a search model with limited information and search frictions to explain these facts. Reference prices provide information on outside trade options that inform optimal breakups, leading to the first stylized fact. Strong heterogeneity in breakup frictions across relationships can explain the Zipf's law hazards. [ABSTRACT FROM AUTHOR]

Liquefied petroleum gases (LPGs) together with other natural gas liquids (NGLs) have played an important role in the current U.S. shale gas boom. Depressed gas prices in recent years have made pure natural gas operations less profitable. The result is that liquids components in gas production have become increasingly important in ensuring the profitability of shale gas operations. In this paper we investigate whether the shale gas expansion, which has led to an increase in associated LPG production, has also affected the historically strong relationship between LPG and oil prices. Revealing the strength and stability of the LPG/oil relationship is relevant when it comes to the future profitability and development of the U.S. natural gas sector. Our results suggest that the LPG/oil relationship has weakened in recent years with a move towards cheaper liquids relative to oil. This is consistent with developments in the natural gas sector with increased liquids production. A consequence is that U.S. natural gas operations cannot automatically rely on high liquids prices to ensure profitability. Keywords: Liquefied petroleum gas, Natural gas, Oil, Cointegration, Price analysis, 1. INTRODUCTION The U.S. natural gas market has changed dramatically in recent years. The shale gas boom has increased domestic natural gas production to the degree that only minimal LNG [...]