Semester of Graduation
Master of Science in Agricultural Engineering (MSAgE)
Agricultural Economics and Agribusiness
In April 2022, the United States traded with approximately 233 countries. Exports and imports of goods and services represent 11.73% and 14.58% of U.S. GDP respectively. Because of that, U.S. bilateral trade is important. COVID-19 impacted the economy and trade in different ways as supply and demand changes. The objective of this study is to determine the impact of COVID-19 in U.S. bilateral trade using an augmented gravity model and panel data from 20 U.S. partner countries and the United States over 24 quarters, from 2015 to 2021.
To accomplish these objectives, a gravity model was used and Random effects GLS and PPML methods were applied. Two models were created, one for U.S. exports and another for U.S. imports with both having explanatory variables that include, GDP from the U.S. and partners countries, currency exchange rate, free trade agreements, new COVID-19 cases for the U.S. and trader partners, direct payments to individuals for both the U.S. and trade partners and other stimulus given to trader partners. All these variables were normalized as indices.
The study shows that GDP impacts trade flows, both exports and imports, as the gravity model suggests. COVID-19 had a significant impact on US exports and imports, both in the U.S. and trader partners. The results show that when new U.S. COVID-19 cases increased, U.S. exports increased, and U.S. imports decreased. When new COVID-19 cases of U.S. trading partners increased, U.S. exports are shown to decrease and U.S. imports increase. Theory suggests that the impact on U.S. exports and imports may occur due to a decrease in consumption resulting from lockdowns.
Lopez Lopez, Dacia, "Utilization of a Gravity Model to Determine the Impact of COVID-19 in US Bilateral Trade" (2022). LSU Master's Theses. 5668.
Kennedy, P. Lynn