The impact of monetary policy shocks on digital services trade: global evidence

Digital services trade has become an increasingly important component of international trade in the context of digital transformation, yet evidence on how macroeconomic policy affects this new trade form remains limited. Using panel data for 72 countries and regions from 2010 to 2023, this paper examines the impact of monetary policy shocks on digital services trade. The results show that a shift towards a more restrictive monetary policy stance significantly reduces digital services trade, with a stronger negative effect on exports than on imports. Mechanism analyses indicate that the exchange rate channel and the credit channel are the main pathways through which monetary policy affects digital services trade, by weakening export competitiveness and tightening financing conditions for firms. Further analyses reveal that the adverse effect of monetary policy shocks is more pronounced in economies with higher levels of globalization and weaker digital infrastructure. These findings extend the literature on monetary policy transmission from traditional goods trade to digitally delivered services and highlight the importance of macro-financial conditions in shaping cross-border digital economic activity.