1887

OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.

English

Understanding structural effects of COVID-19 on the global economy

First steps

The COVID-19 pandemic and associated policy responses are likely to alter the global economy in a way that affects its ability to adjust to future shocks and changes. This paper develops a point of reference for thinking about developments which could be deemed long-term and which could in turn be incorporated into what we call a “post-COVID-19 baseline”. Using the OECD’s CGE model METRO, the paper finds that output declines observed in 2020 were driven primarily by reductions in labour productivity due to varying abilities to telework across countries. Negative economic impacts were largely mitigated by government support to firms and households. Border measures to control the spread of the virus also had less of an impact on total output, reflecting important government efforts to facilitate cross border flows of goods and services whilst managing cross border movements of people. Demand shifts had the smallest impact on global GDP, but had significant and heterogeneous impacts on consumption, output and trade changes across countries and sectors. This in turn contributed to pressures on some global supply chains.

English

Keywords: shocks, trade, general equilibrium model
JEL: F17: International Economics / Trade / Trade: Forecasting and Simulation; F14: International Economics / Trade / Empirical Studies of Trade; C68: Mathematical and Quantitative Methods / Mathematical Methods; Programming Models; Mathematical and Simulation Modeling / Computable General Equilibrium Models
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