The Cost of COVID-19: A Rough Estimate of the 2020 U.S. GDP

6 Pages Posted: 23 Mar 2020 Last revised: 27 Apr 2020

See all articles by Christos Makridis

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students

Date Written: March 22, 2020

Abstract

This paper provides an early estimate of the economic effects of the national quarantine policy associated with the COVID-19 pandemic in the United States. Using a measure of digital intensity from Gallipoli and Makridis (2018), we exploit counties' exposure to industries that vary in their digital intensity as a proxy for the adverse effects of the decline in physical activity and in-person shutdown. Our baseline estimates suggest that the average county experiences a 5% decline in real GDP growth for two months of economic shutdown, which amounts to $2.14 trillion. Our results also suggest that the effects are highly heterogeneous across countries: for example, the most adversely affected counties may experience as much as a 15% decline in real GDP growth. Counties with higher shares of college graduates, digital workers, and higher median household income are less adversely affected, whereas those with higher shares of non-tradables employment are more affected.

Keywords: coronavirus, COVID-19, real GDP, economic growth

JEL Classification: E3, E6, H3

Suggested Citation

Makridis, Christos and Hartley, Jonathan, The Cost of COVID-19: A Rough Estimate of the 2020 U.S. GDP (March 22, 2020). Available at SSRN: https://ssrn.com/abstract=3559139 or http://dx.doi.org/10.2139/ssrn.3559139

Christos Makridis (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students ( email )

Cambridge, MA
United States

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