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The Effect of COVID-19 on Firms' Behaviour: The Case of Japan

Author

Listed:
  • Yuting Chen

    (Yokohama National University)

  • Bin Ni

    (Hosei University)

Abstract

Since the onset of the coronavirus disease (COVID†19) pandemic, social distancing practices and government†mandated lockdowns have become the norm. These have cut off interaction amongst people, firms, and society, triggering an even larger decline in economic activity. In this study, we apply annual Japanese foreign affiliate data to quantify how COVID-19 has affected firms’ behaviour in various aspects. The estimation results show that both the revenue and purchasing behaviour of Japanese foreign affiliates were affected during COVID-19. This negative impact is mainly through the channel of stringent regulations imposed by host countries where affiliates are located. The general result we can derive from these findings is that COVID-19 negatively affects Japanese firms engaged in overseas activities. This leaves us with the question of when external shocks such as COVID19 stand in the way of firms’ overseas activities, and what role the government should play to achieve a balance between safety and economic revival.

Suggested Citation

  • Yuting Chen & Bin Ni, 2024. "The Effect of COVID-19 on Firms' Behaviour: The Case of Japan," Working Papers DP-2023-34, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:dp-2023-34
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    References listed on IDEAS

    as
    1. Kazunobu Hayakawa & Hiroshi Mukunoki, 2021. "Impacts of Lockdown Policies on International Trade," Asian Economic Papers, MIT Press, vol. 20(2), pages 123-141, Summer.
    2. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
    3. Felbermayr, Gabriel (Ed.), 2020. "The world economy after the coronavirus shock: Restarting globalization?," Kieler Beiträge zur Wirtschaftspolitik 26, Kiel Institute for the World Economy (IfW Kiel).
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