Coronavirus Disease 2019 and the Global Economy
31 Pages Posted: 16 Mar 2020 Last revised: 26 Jun 2020
Date Written: June 26, 2020
Using daily data on the coronavirus disease 2019 (COVID-19) cases from China and the rest of the world (ROW), this paper investigates the corresponding effects on the global economic activity measured by the Baltic Exchange Dry Index (BDI). The empirical results based on a structural vector autoregression including crude oil prices (COP) suggest that a weekly increase of 1,000 in daily COVID-19 cases in China results in about 7% of a cumulative reduction in BDI after three months, whereas a weekly increase of 1,000 in daily COVID-19 cases in the rest of the world results in about 0.4% of a cumulative reduction in COP. The historical decomposition results further suggest that the oil price plunge starting from March 2020 is mostly explained by the corresponding OPEC disagreement.
Keywords: COVID-19, Coronavirus, Baltic Dry Index, Crude Oil Prices
JEL Classification: F60, I10
Suggested Citation: Suggested Citation