Container Trade and the U.S. Recovery

Lutz Kilian, Nomikos Nikos and Xiaoqing Zhou

No 16277, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Since the 1970s, exports and imports of manufactured goods have been the engine of international trade and much of that trade relies on container shipping. This paper introduces a new monthly index of the volume of container trade to and from North America. Incorporating this index into a structural macroeconomic VAR model facilitates the identification of shocks to domestic U.S. demand as well as foreign demand for U.S. manufactured goods. We show that, unlike in the Great Recession, the primary determinant of the U.S. economic contraction in early 2020 was a sharp drop in domestic demand. Although detrended data for personal consumption expenditures and manufacturing output suggest that the U.S. economy has recovered to near 90% of pre-pandemic levels as of March 2021, our structural VAR model shows that the component of manufacturing output driven by domestic demand had only recovered to 57% of pre-pandemic levels and that of real personal consumption only to 78%. The difference is mainly accounted for by unexpected reductions in frictions in the container shipping market.

Keywords: Merchandise trade; Container; Shipping; Manufacturing; Consumption; Covid-19; Supply chain; Recession; Recovery; Globalization (search for similar items in EconPapers)
JEL-codes: E32 E37 F47 F62 (search for similar items in EconPapers)
Date: 2021-06
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Related works:
Journal Article: Container Trade and the U.S. Recovery (2023)
Working Paper: Container Trade and the U.S. Recovery (2021)
Working Paper: Container Trade and the U.S. Recovery (2021)
Working Paper: Container trade and the U.S. recovery (2021)
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