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Trade Openness, COVID-19 Shock, Foreign Direct Investment, Inflation, and Output Volatility in Six ASEAN Member States

Author

Listed:
  • Chinmaya Behera

    (Goa Institute of Management)

  • Badri Narayan Rath

    (Indian Institute of Technology Hyderabad)

Abstract

This study examines the effect of trade openness and COVID-19 shock on output volatility. Quarterly data from 2010 to 2022 are used, focussing on six Member States within the Association of Southeast Asian Nations (ASEAN). The analysis, conducted through timeseries regression, reveals that trade openness had a notable impact on output volatility in most ASEAN Member States, excluding Thailand and Indonesia. Furthermore, it found that the pandemic had an impact on the output volatility of Thailand and the Philippines. Macroeconomic variables were also incorporated, such as foreign direct investment (FDI) and inflation. Under the panel framework, it was found that both variables significantly impacted output volatility. These findings indicate that policymakers should prioritise trade openness and inflation control during uncertain events, such as a global pandemic.

Suggested Citation

  • Chinmaya Behera & Badri Narayan Rath, 2024. "Trade Openness, COVID-19 Shock, Foreign Direct Investment, Inflation, and Output Volatility in Six ASEAN Member States," Working Papers DP-2023-31, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2023-31
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade openness; COVID-19 shock; Output volatility; Inflation; FDI;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F1 - International Economics - - Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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