This study focuses on the impact of uncertainty on international trade.
We investigate the impact of different types of uncertainty including economic policy, financial, geo-political, health and trade policy uncertainty, on the export demand functions of Brazil, Russia, India, China and South Africa for the period August 2005 to February 2023. We utilize non-linear panel autoregressive distributed lag estimation to show that there is a significant impact of rising uncertainty on the exports.
The results also suggest that events that accentuated financial stress such as global financial crisis and those heightening geo-political tensions including Russia–Ukraine war had a dampening effect on the exports in the long run, while the COVID-19 pandemic affected exports in the short run only.
To the best of our knowledge, there is scant empirical literature examining the impact of uncertainty on international trade. The possibility that the impact of uncertainty on trade varies by type is not captured in the current literature.
