The Trade Impact of the COVID-19 Pandemic

30 Pages Posted: 9 Jun 2021

See all articles by Xuepeng Liu

Xuepeng Liu

Kennesaw State University - Department of Economics and Finance

Emanuel Ornelas

Sao Paulo School of Economics

Huimin Shi

Renmin University of China - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2021

Abstract

Using a gravity-like approach, we study how Covid-19 deaths and lockdown policies affected countries’ imports from China during 2020. We find that a country’s own Covid-19 deaths and lockdowns significantly reduced its imports from China, suggesting that the negative demand effects prevailed over the negative supply effects of the pandemic. On the other hand, Covid-19 deaths in the main trading partners of a country (excluding China) induces more imports from China, partially offsetting countries’ own effects. The net effect of moving from the pre-pandemic situation to another where the main variables are evaluated at their 2020 mean is, on average, a reduction of nearly 10% in imports from China. There is also significant heterogeneity. For example, the negative own effects of the pandemic vanish when we restrict the sample to medical goods and are significantly mitigated for products with a high “work-from-home” share or a high contract intensity for products exported under processing trade, and for capital goods. We also find that deaths and lockdowns in previous months tend to increase current imports from China, partially offsetting the contemporaneous trade loss, suggesting that trade is not simply “destroyed,” but partially “postponed”.

JEL Classification: F140

Suggested Citation

Liu, Xuepeng and Ornelas, Emanuel and Shi, Huimin, The Trade Impact of the COVID-19 Pandemic (2021). Available at SSRN: https://ssrn.com/abstract=3862243 or http://dx.doi.org/10.2139/ssrn.3862243

Xuepeng Liu (Contact Author)

Kennesaw State University - Department of Economics and Finance ( email )

United States

HOME PAGE: http://ksuweb.kennesaw.edu/~xliu6/

Emanuel Ornelas

Sao Paulo School of Economics ( email )

Rua Itapeva 474 s.1202
São Paulo, São Paulo 01332-000
Brazil

HOME PAGE: http://https://sites.google.com/site/emanuelornelaseo/

Huimin Shi

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100080
China

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