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Trade under lockdown

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  • Berthou, Antoine
  • Stumpner, Sebastian

Abstract

To curb the effect of the Covid-19 pandemic on public health, many countries around the world introduced lockdown policies in 2020. This paper estimates the effect of these lockdowns on international trade flows using a rich dataset of monthly bilateral trade flows covering over 80% of world trade. We first document that both exporter and importer lockdowns significantly reduced trade flows, that this effect differed substantially across sectors, and has been declining over time. We then decompose this total effect into a direct effect of lockdowns on trade, and an indirect effect that is mediated by a decline in economic activity. Our results indicate that lockdowns reduced trade also conditional on economic activity, suggesting an important increase in trade costs due to lockdowns. A quantification exercise shows that the welfare consequences of these trade costs were sizable, amounting to about one sixth of the welfare loss under a complete return to autarky.

Suggested Citation

  • Berthou, Antoine & Stumpner, Sebastian, 2024. "Trade under lockdown," Journal of International Economics, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:inecon:v:152:y:2024:i:c:s0022199624001405
    DOI: 10.1016/j.jinteco.2024.104013
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    More about this item

    Keywords

    COVID-19; Impact of lockdowns;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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