Bank of Lithuania
2022-05-17
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The article “How Does Trade Adjust to Global Disruptions? The Role of Supply Chain habits” by Povilas Lastauskas, Head of CEFER (Bank of Lithuania), Justas Dainauskas (London School of Economics) and Mariarosaria Comunale (IMF) has been cited in world-class publications.

 

Just recently the article has been published in IMF Research Perspectives, the main biannual research publication by the IMF.

The research described in the article focuses on imbalanced and fragmented global trade flows and, in particular, the role of supply chains, by explaining and forecasting the dynamics of bilateral trade flows.

Little is known as to why global shocks, such as the COVID-19 pandemic or the 2018 financial crisis, lead to a synchronised but very different trade flow reaction, which is far ahead of changes in revenue or output.

According to the research, countries that are less integrated in global value chains, trading with faraway countries, both geographically and institutionally, face the greatest trade flow disruption when responding to global trade shocks. Meanwhile, trade flows between countries integrated in regional value chains are more resilient to shocks and tend to recover faster.

On the basis of the aforementioned article of the Bank of Lithuania, other research papers have been previously published on the research-based economic policy portal VoxEU, as well as in Research for the World of the London School of Economics and Political Science. The results of the research are also cited in the research paper “Trade agreements and trade resilience during COVID-19 pandemic” of the United Nations Conference on Trade and Development.