IMF Working Papers

Supply Spillovers During the Pandemic: Evidence from High-Frequency Shipping Data

Author/Editor:

Diego A. Cerdeiro ; Andras Komaromi

Publication Date:

December 18, 2020

Electronic Access:

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Summary:

World trade contracted dramatically during the global economic crisis induced by the COVID-19 pandemic. Disruptions in international supply chains were widely reported as governments imposed containment measures (lockdowns) to halt the spread of the disease. At the same time, demand declined as households and firms scaled back spending. This paper attempts to disentangle the supply and demand channels in trade by quantifying the causal effect of supply spillovers from lockdowns. We utilize a novel dataset of daily bilateral seaborne trade, and design a shift-share identification strategy that leverages geography-induced cargo delivery lags to track the transmission of supply disruptions across space. We find strong but short-lived supply spillovers of lockdowns through international trade. Moreover, the evidence is suggestive of the downstream propagation of countries’ lockdowns through global supply chains.

Series:

Working Paper No. 2020/284

Subject:

COVID-19 Financial sector policy and analysis Foreign currency exposure Health Imports International trade Money Plurilateral trade Spillovers

Frequency:

regular