COVID-19 pandemic and trade flows: empirical evidence from selected Asian Pacific countries

Title

COVID-19 pandemic and trade flows: empirical evidence from selected Asian Pacific countries

Creator

Bhat M.A.; Wani F.; Amin A.; Bhat G.M.; Beg F.B.

Description

Purpose: This paper aims to investigate the effects of the COVID-19 crisis on trade flows in Asia Pacific countries and explores the causality between COVID-19-related shocks and trade. Design/methodology/approach: The authors used two novel techniques, namely, two-stage instrumental-variables (2SIV) approach and Juodis, Karavias and Sarafids (JKS) causality test, to examine trade dynamics in the Asia Pacific region during the pandemic. Findings: Using the monthly trade data of 17 Asia Pacific countries between January 2020 and December 2021, the results were threefold. Firstly, the empirical analysis showed that during the COVID-19 crisis, the flow of exports tended to persist idiosyncratically in comparison to the flow of imports. In particular, a specific finding was that the persistence level in exports was about 20%25% higher than that in imports. Secondly, the authors found that the past values of COVID-19 cases and COVID-19 deaths contain information that helps to predict exports/imports over and above the information contained in the past values of exports/imports alone. Finally, the study established that the government response and stringency indexes have a Granger-causal relationship with exports and imports. Research limitations/implications: For the foreseeable future, these findings have significant policy ramifications. Firstly, if a COVID-19 crisis-like situation emerges in the future, it will be critical for countries to maintain their competitiveness throughout the crisis, like the COVID-19 pandemic, while also rebuilding trade relationships wherever possible. Secondly, because information about government responses and measures can also be used to predict future trade flows, prudent management of government responses and stringent measures will be necessary in a crisis like COVID-19 to achieve the optimum level of exports and imports. At the same time, the trading partners should give up the idea of trade protection and focus on finding a way to balance the conflicting needs of imports and exports. Originality/value: To the best of the authors knowledge, the authors, for the first time, used a 2SIV approach and JKS causality test to examine trade dynamics in the Asia Pacific region during the pandemic. In addition, the authors present the first comprehensive analysis of the evolving relationships between export and import flows and governmental policy responses under COVID-19. As a result, it contributes uniquely to both public and international economics. 2023, Emerald Publishing Limited.

Source

Journal of Chinese Economic and Foreign Trade Studies, Vol-16, No. 3, pp. 219-241.

Date

2023-01-01

Publisher

Emerald Publishing

Subject

COVID-19 pandemic; Government response index; JKS causality test; Stringency index; Trade flows

Coverage

Bhat M.A., Department of Data Science, Christ University, Lavasa, India; Wani F., Department of Economics, Central University of Kashmir, Ganderbal, India; Amin A., Department of Economics, Central University of Kashmir, Ganderbal, India; Bhat G.M., Department of Economics, Central University of Kashmir, Ganderbal, India; Beg F.B., Department of Tourism, GDC, Magam, Srinagar, India

Rights

Restricted Access

Relation

ISSN: 17544416

Format

Online

Language

English

Type

Article

Identifier

https://doi.org/10.1108/JCEFTS-05-2023-0023

https://www.scopus.com/inward/record.uri?eid=2-s2.0-85173468706&doi=10.1108%2fJCEFTS-05-2023-0023&partnerID=40&md5=4afde2afe83932ae1f60248c65ab0782