Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu

56 Pages Posted: 26 Mar 2020 Last revised: 11 Jun 2020

See all articles by Sergio Correia

Sergio Correia

Board of Governors of the Federal Reserve System

Stephan Luck

Federal Reserve Bank of New York

Emil Verner

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

Date Written: June 5, 2020

Abstract

Do non-pharmaceutical interventions (NPIs) aimed at reducing mortality during a pandemic necessarily have adverse economic effects? We use variation in the timing and intensity of NPIs across U.S. cities during the 1918 Flu Pandemic to examine their economic impact. While the pandemic itself was associated with economic disruptions in the short run, we find these disruptions were similar across cities with strict and lenient NPIs. In the medium run, we find suggestive evidence that, if anything, NPIs are associated with better economic outcomes. Our findings indicate that NPIs can reduce disease transmission without necessarily further depressing economic activity.

Keywords: 1918 Flu Pandemic, non-pharmaceutical interventions (NPI), real economy

JEL Classification: I10, I18, E32, H1

Suggested Citation

Correia, Sergio and Luck, Stephan and Verner, Emil, Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu (June 5, 2020). Available at SSRN: https://ssrn.com/abstract=3561560 or http://dx.doi.org/10.2139/ssrn.3561560

Sergio Correia

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Stephan Luck

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Emil Verner (Contact Author)

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

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
76,466
Abstract Views
395,626
rank
10
PlumX Metrics