Trade in the time of COVID-19: an empirical analysis based on Italian data

Gianmarco Cariola ()
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Gianmarco Cariola: Bank of Italy (Bologna Branch)

Review of World Economics (Weltwirtschaftliches Archiv), 2025, vol. 161, issue 4, No 6, 1463-1499

Abstract: Abstract This paper examines the impact of the COVID-19 pandemic on international trade using a detailed panel database of Italian firms’ transactions. The trade adjustment is decomposed into three margins (intensive, extensive, and sub-extensive) revealing that while the intensive margin was prevalent, the sub-extensive margin significantly contributed to the trade collapse in 2020. A regression framework shows that foreign lockdown stringency, rather than COVID-19 death rates, drove the decline in imports and exports, with effects most pronounced during the first wave. Conversely, localized restrictions in Italy had no significant impact on trade, as they primarily targeted non-tradable sectors. Less intensively traded varieties were more likely to be dropped during the shock, with a higher probability of remaining untraded in subsequent years, indicating lasting changes in trade portfolios. These findings highlight the pandemic’s significant and non-transitory effects on the structure of international trade, and underline the importance of firm-level heterogeneity in understanding global shocks.

Keywords: Trade; Covid-19; Supply chains; Italian data (search for similar items in EconPapers)
JEL-codes: D10 D22 F14 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10290-025-00586-4

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