The Economic Effects of Covid-19 Containment Measures

45 Pages Posted: 28 Jul 2020 Last revised: 16 Aug 2020

See all articles by Pragyan Deb

Pragyan Deb

International Monetary Fund (IMF); London School of Economics & Political Science (LSE) - Financial Markets Group

Davide Furceri

International Monetary Fund (IMF)

Jonathan D. Ostry

International Monetary Fund (IMF)

Nour Tawk

International Monetary Fund (IMF)

Date Written: July 2020

Abstract

Containment measures are crucial to halt the spread of the 2019 COVID-19 pandemic but entail large short-term economic costs. This paper tries to quantify these effects using daily global data on real-time containment measures and indicators of economic activity such as Nitrogen Dioxide (NO2) emissions, flights, energy consumption, maritime trade, and mobility indices. Results suggest that containment measures have had, on average, a very large impact on economic activity - equivalent to a loss of about 15 percent in industrial production over a 30-day period following their implementation. Using novel data on fiscal and monetary policy measures used in response to the crisis, we find that these policy measures were effective in mitigating some of these economic costs. We also find that while workplace closures and stayat- home orders are more effective in curbing infections, they are associated with the largest economic costs. Finally, while easing of containment measures has led to a pickup in economic activity, the effect has been lower (in absolute value) than that from the tightening of measures.

Keywords: containment measures, COVID-19, Pandemics

JEL Classification: D43, E52, E58, L11

Suggested Citation

Deb, Pragyan and Furceri, Davide and Ostry, Jonathan D. and Tawk, Nour, The Economic Effects of Covid-19 Containment Measures (July 2020). CEPR Discussion Paper No. DP15087, Available at SSRN: https://ssrn.com/abstract=3661431

Pragyan Deb (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Davide Furceri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jonathan D. Ostry

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Nour Tawk

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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