The effect of Chinese intermediate products supply shock on Russian manufacture

D. Kuznetsov
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D. Kuznetsov: Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia

Journal of the New Economic Association, 2024, vol. 65, issue 4, 136-155

Abstract: The study assesses the impact of the intermediate imports supply shock on the dynamics of Russian manufacture. The chronology of COVID-19 pandemic suggests that the 1st quarter of 2020 was the period during which the spread of the virus directly affected economic activity only in China, but not in most other countries. Therefore, the decline in imports from China during this period can be seen as a natural experiment, which provides exogenous variation of intermediate imports supply. The exposure of Russian industries to Chinese intermediate import shock is calculated based on input-output coefficients, as well as China's share of intermediate goods imports and the magnitude of supply shock. Econometric estimates suggest that the relationship between the dynamics of manufacture and the imports of intermediate goods from China changed significantly in the 1st quarter of 2020. The result consistent with the assumption that the value of the coefficient for periods before 2020 may be endogenous, therefore it cannot be used to assess the consequences of the intermediate goods supply shock. Based on the estimated coefficients, the negative effect of supply shock on gross manufacturing value added in the 1st quarter of 2020 is estimated as 1.9-3.1% and 6.5-7.0% for manufacture exports.

Keywords: production; export; import; manufacture; intermediate products; supply shock; global value chains; COVID-19 (search for similar items in EconPapers)
JEL-codes: D57 F10 F14 L23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:65:p:136-155

DOI: 10.31737/22212264_2024_4_136-155

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