International Trade Spillovers from Domestic COVID-19 Lockdowns

By Shekhar Aiyar, Davide Malacrino, Adil Mohommad, Andrea F Presbitero

June 17, 2022

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Format: Chicago

Shekhar Aiyar, Davide Malacrino, Adil Mohommad, and Andrea F Presbitero. International Trade Spillovers from Domestic COVID-19 Lockdowns, (USA: International Monetary Fund, 2022) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

While standard demand factors perform well in predicting historical trade patterns, they fail conspicuously in 2020, when pandemic-specific factors played a key role above and beyond demand. Prediction errors from a multilateral import demand model in 2020 vary systematically with the health preparedness of trade partners, suggesting that pandemic-response policies have international spillovers. Bilateral product-level data covering about 95 percent of global goods trade reveals sizable negative international spillovers to trade from supply disruptions due to domestic lockdowns. These international spillovers accounted for up to 60 percent of the observed decline in trade in the early phase of the pandemic, but their effect was shortlived, concentrated among goods produced in key global value chains, and mitigated by the availability of remote working and the size of the fiscal response to the pandemic.

Subject: COVID-19, Export restrictions, Exports, Health, Imports, International trade, Trade in goods

Keywords: COVID-19, Export restrictions, Exports, Global, Goods trade, Import demand model, Imports, Lockdowns, Pandemic-response policy, Spillover effect, Spillover effects, Trade, Trade in goods, Trade partner

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/120
Stock No:

WPIEA2022120
ISBN:

9798400212178
ISSN:

1018-5941

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