The Impact of Stay-at-Home Orders on US Output: A Network Perspective
20 Pages Posted: 15 Apr 2020 Last revised: 20 Apr 2020
Date Written: April 18, 2020
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: Suggested Citation