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© 2022 International Monetary Fund
WP/22/81
IMF Working Paper
Research Department
Trade and the COVID-19 Pandemic: Lessons from French Firms Prepared by Mariya Brussevich, Chris Papageorgiou, Pauline Wibaux
Authorized for distribution by Chris Papageorgiou
May 2022
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: This paper uses granular customs data from France to investigate propagation of the COVID-19 shock along the supply chains in 2020. It quantifies the effect of the COVID-19 shock on trade adjustment and identifies mitigating and amplifying factors contributing to French firms’ heterogeneous adjustment paths. Early in the pandemic, firms mainly responded to global lockdowns and spread of the virus by reducing trade volumes (intensive margin) as opposed to exiting from import and export markets (ex-tensive margin). However, adjustment along the extensive margin played a more important role in trade with developing countries. It is shown that the impact of lockdowns was stronger for final consumer goods and the trade recovery was predominantly demand-driven. More automated, inventory-intensive, older, and medium-sized firms were more insulated from the shock, whereas firms’ reliance on air transportation for shipping goods amplified the shock. Trade bans and promotion measures implemented by governments in response to the pandemic had little impact on aggregate trade flows.
RECOMMENDED CITATION: Brussevich M., C. Papageorgiou and P. Wibaux. 2022. “Trade and the COVID-19 pandemic: lessons from French firms,” IMF Working Paper No. 22/81, International Monetary Fund, Washington, D.C.
| JEL Classification Numbers: | D22; F10 |
| Keywords: | COVID-19, trade, supply chains disruptions, French firms |
| Author’s E-Mail Address: | mbrussevich@imf.org, cpapageorgiou@imf.org, pauline.wibaux@cepii.fr |
| JEL Classification Numbers: | D22; F10 |
| Keywords: | COVID-19, trade, supply chains disruptions, French firms |
| Author’s E-Mail Address: | mbrussevich@imf.org, cpapageorgiou@imf.org, pauline.wibaux@cepii.fr |
Title Page
WORKING PAPERS
Trade and the COVID-19 Pandemic
Lessons from French Firms
Prepared by Mariya Brussevich, Chris Papageorgiou, and Pauline Wibaux1
Contents
1 Introduction
2 Data
3 Three trade margins of adjustment
4 Econometric Specification
5 Results
5.1 Baseline
5.2 Unit values
5.3 COVID-19 shock propagation via supply chains
5.4 Heterogeneous effects: inventory intensity and automation
5.5 Heterogeneous effects: firm characteristics
5.6 Heterogeneous effects: transportation mode
5.7 Role of economic policies
6 Concluding remarks A Role of China
List of Figures
1 Trade margins – Exports
2 Trade margins – Imports
3 Trade margins by income group – Exports
4 Trade margins by income group – Imports
5 3-months rolling average effect of lockdowns on trade flows
6 Response to shock depending on age – Imports
7 Response to shock depending on age – Exports
8 Share of trade per size bin
9 Import adjustment to the COVID-19 shock along size distribution
10 Export adjustment to the COVID-19 shock along size distribution
List of Tables
1 Summary statistics by country group
2 Contribution of margins to changes in trade flows by trading partner
3 Baseline Results
4 Unit values
5 Shock propagation in supply chains
6 Upstreamness in supply chains
7 Inventory intensity
8 Robotization
9 Firm age
10 Firm size
11 Transportation mode
12 COVID-19 trade policies
13 Economic Support Policies
A.1 Baseline and EM specifications excluding trade with China