Adam Brzezinski, Valentin Kecht, David Van Dijcke, 12 June 2020

Lockdown policies have been found to be effective in promoting social distancing and slowing down the spread of COVID-19. Yet, such measures are often blamed for downturns in the economy. This column argues that the lockdowns in the US are in fact efficient in minimising the costs of the epidemic, once both the economic and medical burden that would arise in the absence of such policies are considered. Estimates from a controlled SIR model, which includes the possibility for changes in behaviour, suggest that lockdowns reduce the costs of the pandemic by at least 1.7% of annual GDP compared to a no-lockdown scenario.

Luiz Brotherhood, Philipp Kircher, Cezar Santos, Michèle Tertilt, 12 June 2020

Governments worldwide locked down their economies in response to the COVID-19 pandemic. This column considers two lockdown policies – a stay-at-home order and a test-and-quarantine approach – and their projected effects on deaths and GDP. Adjustments in individual behaviour, especially by the elderly, can save many lives, while lockdown policies targeted at the young prolongs the time need to reach herd immunity and could lead to more deaths in the long run. Testing and quarantining is an effective policy but requires about 10 million tests each week for the US alone.

Ajay Shenoy, 11 June 2020

Even as governments relax their lockdowns, they are considering how quickly to re-impose social distancing in response to a possible new outbreak. This column studies the impact of rainfall-induced social distancing in the days prior to official lockdown. A rainy weekend just prior to lockdown causes people to start staying home sooner, which has persistent impacts on the trajectory of COVID-19 cases and deaths. The impact is largely due to a reduction in the risk of a very big outbreak. Imposing social distancing only a few days sooner may thus help better control the epidemic.

M. Aykut Attar, Ayça Tekin-Koru, 11 June 2020

As governments begin to ease lockdown measures over the coming months, understanding how effectively countries have applied social distancing practices will be essential. This column introduces a Model-Inferred measure of latent social DIStancing (MIDIS) and calculates the measure for 44 countries using daily data and an epidemiology model. Mobility data from Apple and Google indicate that the measure can accurately measure distancing, and the measure also reflects governmental and behavioural responses while maintaining a robust relationship with daily output losses.

Giorgio Barba Navaretti, Giacomo Calzolari, Andrea Dossena, Alessandra Lanza, Alberto Pozzolo, 07 June 2020

The effects of the Covid-19 lockdowns have been severe worldwide. Although most activities were reopened in May, Italian GDP is expected to drop by around 10% in 2020. This column argues that a targeted exit from the lockdown in Italy could have been implemented instead. It identifies those activities with the greatest impact on the national economy, but with low risks for those returning to work and for the country at large. The methodology could also be applied in other countries and in the in the unfortunate event of a new wave of contagion and a new lockdown.

Shaun P. Hargreaves Heap, Christel Koop, Konstantinos Matakos, Asli Unan, Nina Weber, 06 June 2020

The behavioural interventions to control the spread of COVID-19 present trade-offs between health and wealth. To be successful, an understanding of how the public currently values lives over economic loss is needed. A survey experiment in the US and UK finds that people highly prioritise saving lives, but this valuation will change as economic losses mount. Individual differences in valuation also predict individual compliance with COVID-19 policies, and information on COVID-19 deaths and income losses can affect valuations. Caution in relaxing the lockdown will help build public support and mitigate polarising effects and, through increasing compliance, improve its economic efficacy.

Pragyan Deb, Davide Furceri, Jonathan D. Ostry, Nour Tawk, 05 June 2020

Countries have implemented several containment measures to halt the spread of COVID-19 and limit the number of fatalities. This column, using daily data on coronavirus cases and deaths as well as on real-time containment measures implemented by countries, argues that containment measures have been very effective in flattening the ‘pandemic curve’. The effects have been stronger in countries where containment measures have been implemented faster and in those with a larger share of an elderly population, stronger health systems, lower temperatures, and lower population density.

Nicola Fuchs-Schündeln, Moritz Kuhn, Michèle Tertilt, 30 May 2020

The COVID-19 crisis has hit women’s employment particularly hard, partly because the worst-hit sectors have high female employment shares, but also because schools and daycare closures have forced more mothers to leave their jobs. This column looks at Germany, where 26% of the workforce has children aged 14 or younger, and quantifies the macroeconomic importance of working parents. If schools and daycare centres remain closed as the economy slowly reopens, 11% of workers and 8% of all working hours will be lost to the labour market. Policies to restart the economy must accommodate the concerns of these families.

Barthélémy Bonadio, Zhen Huo, Andrei Levchenko, Nitya Pandalai-Nayar, 25 May 2020

Lockdown disruptions to manufacturing and shipping transmit shocks across countries through global supply chains. This column uses a simulation analysis to quantify these impacts and finds that the transmission of foreign lockdowns accounted for one-third of the total Covid-19-related GDP contractions. However, renationalisation of global supply chains is unlikely to help insulate economies from future pandemic-driven lockdowns. The reason is that eliminating reliance on foreign inputs would increase the reliance on domestic inputs. Since a pandemic-related lockdown would also affect domestic input suppliers, there is generally no resilience benefit from renationalising international supply chains.

Luís Santos-Pinto, José Mata, 22 May 2020

Increasing and recurring pleas to return to normality in order to avoid the economic costs of a lockdown rely on the idea that ‘natural’ herd immunity may be achieved by letting Covid-19 spread without measures to contain it. This column discusses key uncertainties associated with Covid-19 and argues that there are substantial benefits in keeping the lockdown in place in order to first learn more about Covid-19 and then decide on the best strategy. This logic is based on option theory which shows that when a strategy has irreversible consequences and there are important uncertainties, there is substantial value in waiting.

Guillaume Chapelle, 20 May 2020

Non-pharmaceutical interventions such as school closures and social distancing were implemented in the US against the spread of the 1918 influenza pandemic. This column explores the effect of these interventions on economic activity and death rates in US cities during and after 1918. The policies lowered the fatality rate during the peak of the pandemic but are associated with a significant rise in the death rate in subsequent years, possibly through reducing herd immunity. Their impact, positive or negative, on the growth of the manufacturing sector in US cities remains an open question.

Gabriele Ciminelli, Sílvia Garcia-Mandicó, 19 May 2020

As many countries around the world are finally past the first peak of the pandemic, it is time to assess what could be done better in case of a second wave. This column analyses the management of COVID-19 in Italy using newly available death registry data covering almost all Italian municipalities. The findings suggest that the closure of non-essential services reduced mortality, while shutting down factories did not. Additionally, within the area of the epidemic epicentre, mortality was up to 50% higher in municipalities far from an ICU, a sign that congestion of the emergency care system may have prevented critical patients from being treated on time.

Guglielmo Briscese, Nicola Lacetera, Mario Macis, Mirco Tonin, 16 May 2020

Many governments have enacted stringent ‘stay-at-home’ policies to mitigate the spread of the COVID-19 pandemic. This column reports evidence from a series of surveys of representative samples of the Italian population on their willingness to comply with the lockdown. The results indicate that people are less compliant if self-isolation measures are extended for longer than expected, which suggests that managing expectations is critical. This finding could be valuable if new waves of infections force governments to re-introduce lockdowns.

Dirk Krueger, 14 May 2020

Do we close our public spaces to protect our communities from Covid-19, or keep them open, as in Sweden? Dirk Krueger tells Tim Phillips that informing the public and then trusting individuals to make good choices might deliver a decline in infections, while minimising the Covid recession.

Download Covid Economics 5, including Dirk's paper.
Picture: Creative Commons/Vogler

Jean-Philippe Platteau, Vincenzo Verardi, 16 May 2020

One puzzle that arises in connection with the spread of Covid-19 is why there is such large variation in infection and death rates both across as well as within countries. This column argues that differences in the way people, and in particular different age groups, interact can explain part of this variation. Simulations show that the measures Belgium would need to take when re-opening its economy would be more moderate if it had the same interaction patterns as Germany, and more strict if it had Italy’s interaction patterns. A key lesson is that there is no one-size-fits-all solution that could be applied to all countries, or even to all regions within a country.

Asger Lau Andersen, Emil Toft Hansen, Niels Johannesen, Adam Sheridan, 15 May 2020

The COVID-19 pandemic has had drastic effects on consumer spending across the world. This column presents evidence based on bank account transaction data from Denmark showing that total card spending was reduced by 25% during the early phase of the crisis. The drop was mostly concentrated on goods and services whose supply is directly restricted by government interventions, suggesting a limited role for spillovers to non-restricted sectors through demand in the short term.

Ayça Tekin-Koru, 14 May 2020

The strict and prolonged age-specific containment measures in Turkey have both reduced infection/death rates and enabled less strict restrictions for the lower-risk groups. This column reviews Turkey’s response and examines the real-time effects of the COVID-19 crisis on production in Turkey. If finds that the targeted containment measures appear to have helped reduce a contraction in production that could have been much worse with a uniform lockdown. It also finds that the major brunt of the health crisis in terms of its human costs has been borne by the working class.

Xiaohui Chen, Ziyi Qiu, 13 May 2020

The COVID-19 pandemic has prompted a vast spectrum of unprecedented government interventions. This column discusses the impact of various interventions on COVID-19 transmission dynamics and the associated economic consequences. Examining the variation in government policies, it finds that policies such as lockdown, school closure, centralised quarantine and mask wearing are effective in controlling the virus transmission. A series of scenario analyses suggest that countries may avoid lockdown by imposing school closures, mask wearing and centralised quarantine simultaneously to reach similar COVID-19 infection mitigation outcomes.

Sam Engle, John Stromme, Anson Zhou, 12 May 2020

Lockdown policies are used to ‘flatten the curve’, but their success rate remains uncertain. This column uses GPS data from mobile phones in the US to show that stay-at-home orders do reduce mobility. However, voluntary reductions are also important, regardless of stay-at-home orders. Counties with a higher share of older people or a lower share of Republican votes are more responsive to lockdown measures. Further, counties with a larger share of jobs that are ‘teleworkable’, a higher median income, or a lower use of public transit are also more responsive, suggesting that multiple factors must be considered.  

Marcus Painter, Tian Qiu, 11 May 2020

Social distancing is vital to mitigate the spread of the novel coronavirus. Leveraging smartphone geolocation data, this column examines how political beliefs impact the effectiveness of state-level social distancing orders in the US. The findings suggest that Republicans and misaligned Democrats are less likely to adhere to social distancing orders. Bipartisan support for social distancing measures thus appears to be a key factor in how quickly we can mitigate the spread of the novel coronavirus.



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