Global Value Chains and U.S. Economic Activity During COVID-19

We investigate the role of global value chains in the declines of manufacturing employment and output in the U.S. during COVID-19. Specifically, we identify the role of global value chains by exploiting heterogeneity across industries in cross-country sourcing patterns and its interaction with exoge...

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Bibliographic Details
Published in:Review - Federal Reserve Bank of St. Louis 2021-01, Vol.103 (3), p.271-288
Main Authors: Santacreu, Ana Maria, Leibovici, Fernando, LaBelle, Jesse
Format: Article
Language:English
Subjects:
Containment
Coronaviruses
COVID-19
Diversification
Economic activity
Employment
Heterogeneity
Manufacturing
Pandemics
Shutdowns
Textiles
Value
Value added
Value chain
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Summary:We investigate the role of global value chains in the declines of manufacturing employment and output in the U.S. during COVID-19. Specifically, we identify the role of global value chains by exploiting heterogeneity across industries in cross-country sourcing patterns and its interaction with exogenous cross-country variation in the containment policies introduced to combat the virus. We find that global value chains played a significant role in the decline of output and employment across U.S. manufactures. Moreover, we find a modest impact of diversifying or renationalizing global value chains in mitigating the economy's exposure to foreign shocks.
ISSN:0014-9187
2163-4505
DOI:10.20955/r.103.271-88