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International Trade Spillovers from Domestic COVID-19 Lockdowns

Author

Listed:
  • Mr. Shekhar Aiyar
  • Mr. Davide Malacrino
  • Mr. Adil Mohommad
  • Mr. Andrea F Presbitero

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.

Suggested Citation

  • Mr. Shekhar Aiyar & Mr. Davide Malacrino & Mr. Adil Mohommad & Mr. Andrea F Presbitero, 2022. "International Trade Spillovers from Domestic COVID-19 Lockdowns," IMF Working Papers 2022/120, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2022/120
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    Cited by:

    1. Chen, Hongyi & Tillmann, Peter, 2023. "Lockdown spillovers," Journal of International Money and Finance, Elsevier, vol. 137(C).

    More about this item

    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;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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