Assessing asymmetric determinants of commodity-level exports: the role of policy responses to the COVID-19 pandemic

ABSTRACT

This paper explores the economic consequences of non-pharmaceutical government intervention to curb disease spread on Indian commodity-level exports. This is the first study to assess the export implications of the pandemic using a panel linear as well as a novel non-linear ARDL framework. Our results show that pandemic-related stringencies have a positive effect on Indian exports in the long-run. This result holds valid for domestic as well export destination countriesʻ stringencies. However, our evidence suggests that reducing stringencies has a more dominating effect on Indian exports than tightening of stringencies. Also, stringencies and uncertainty impact exports adversely in the short-run. Furthermore, pandemic-related financial uncertainty is found to have a dampening effect on exporting. Our results also show a significant asymmetric impact of policy responses on exports, especially for agriculture and manufacturing commodities, while mineral products are relatively less impacted.

KEYWORDS:

• COVID-19
• pandemic
• asymmetric
• exports
• commodity-level
• NARDL

JEL CLASSIFICATION:

• F14
• I18
• C23

Acknowledgments

The authors thank the editor and two anonymous referees for their useful comments and helpful suggestions on the previous version of this paper. Any errors or omissions are solely the authorsʻ.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 WTO (2021) suggest that trade between high-income countries is largely governed by information, transport, and transaction costs, while regulatory differences and trade policy play a more determining role in explaining trade between low- and middle-income countries.

2 Real exchange rate is in indirect quote, where a rise in the rate implies depreciation of the currency.

3 In the trade literature, a rise in economic and other uncertainty is associated with high import dependence (Sharma and Paramati 2021).

4 Economic times, June 23, 2020. Brands looking to shift production from China to India. Retrieved from: https://economictimes.indiatimes.com/industry/cons-products/durables/brands-looking-to-shift-production-from-china-to-india/articleshow/76509185.cms?from=mdr on March 11, 2021.