International Trade Spillovers from Domestic COVID-19 Lockdowns

Shekhar Aiyar, Davide Malacrino, Adil Mohommad and Andrea Presbitero

No 2022/120, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Trade; Spillover effects; Lockdowns; COVID-19; import demand model; pandemic-response policy; trade partner; goods trade; spillover effect; Imports; Export restrictions; Trade in goods; Exports; Global (search for similar items in EconPapers)
Pages: 48
Date: 2022-06-17
New Economics Papers: this item is included in nep-int
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Working Paper: International trade spillovers from domestic COVID-19 lockdowns (2022)
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