The Covid-19 Pandemic and European Trade Flows: Evidence from a Dynamic Panel Model

Guglielmo Maria Caporale, Anamaria Diana Sova and Robert Sova

No 9848, CESifo Working Paper Series from CESifo

Abstract: This paper investigates the impact of the Covid-19 pandemic on trade flows in the case of the European countries. First, an ARDL dynamic panel model is estimated using the PMG method to analyse monthly data covering the most recent period (2019M1-2021M12); then, the GMM and PCSE approaches are applied to a much longer span of quarterly data (2000Q1-2021Q4), which also includes the Global Financial Crisis (GFC) of 2007-2009, in order to compare the trade impact of two different crises. The findings based on the monthly data provide clear evidence of the significant negative effects of the Covid-19 pandemic on both exports and imports in both the short and the long run, and also suggest that digitalization was instrumental in mitigating the impact of the crisis and speeding up the recovery. The quarterly analysis over a longer time period indicates that both the GCF and the Covid-19 pandemic had negative effects on trade but of a different magnitude. The use of digital technology enabling remote work and e-commerce are again some of the factors likely explaining why international trade fell by less and also rebounded much more quickly during the Covid-19 pandemic compared to the GFC.

Keywords: Covid-19 pandemic; trade flows; dynamic panel models; pooled mean group (PMG) estimator (search for similar items in EconPapers)
JEL-codes: C25 E61 F13 F15 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: The Covid‐19 pandemic and European trade flows: Evidence from a dynamic panel model (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9848

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