The Impact of Stay-at-Home Orders on US Output: A Network Perspective

20 Pages Posted: 15 Apr 2020 Last revised: 20 Apr 2020

See all articles by Shaowen Luo

Shaowen Luo

Virginia Polytechnic Institute & State University - Department of Economics

Kwok Ping Tsang

Virginia Polytechnic Institute & State University

Zichao Yang

Virginia Polytechnic Institute & State University - Department of Economics

Date Written: April 18, 2020

Abstract

Under the stay-at-home orders issued by states, economic activities are reduced or put on hold by some states across the U.S. to control the spread of COVID-19. By combining several sources of data, we estimate the output loss due to such restrictions using a network approach. Based on our most conservative estimates, the measures as of April 15, 2020 reduce 26% of total US output per period, and about 43% of which is due to the input-output connections in the production network. Using a SIR model with an inter-state infection network, we also calculate the cost of reducing each infection to be approximately $150,000 during the period of March 19 to April 15, 2020. Simulation results of various hypothetical stay-at-home orders show that the unit cost of infection reduction of the existing order is about 13% higher than the local minimum.

Keywords: COVID-19; production network; labor shock; stay-at-home orders

JEL Classification: E23, E24, F62

Suggested Citation

Luo, Shaowen and Tsang, Kwok Ping and Yang, Zichao, The Impact of Stay-at-Home Orders on US Output: A Network Perspective (April 18, 2020). Available at SSRN: https://ssrn.com/abstract=3571866 or http://dx.doi.org/10.2139/ssrn.3571866

Shaowen Luo

Virginia Polytechnic Institute & State University - Department of Economics ( email )

3021 Pamplin Hall
Blacksburg, VA 24061
United States

Kwok Ping Tsang (Contact Author)

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

HOME PAGE: http://https://sites.google.com/site/byrontkp/

Zichao Yang

Virginia Polytechnic Institute & State University - Department of Economics ( email )

3021 Pamplin Hall
Blacksburg, VA 24061
United States

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