Opening-up Trajectories and Economic Recovery: Lessons after the First Wave of the COVID-19 Pandemic

World Bank Policy Research Working Paper No. 9480

42 Pages Posted: 2 Dec 2020

See all articles by Asli Demirgüç-Kunt

Asli Demirgüç-Kunt

World Bank

Michael Lokshin

World Bank - Development Research Group (DECRG)

Iván Torre

World Bank

Date Written: November 24, 2020

Abstract

This paper analyzes the reopening process of countries in Europe and Central Asia after the first wave of the COVID-19 pandemic and provides evidence on the effects of different reopening trajectories and their timing and speed on economic recovery. The analysis indicates that countries that adopted a gradual, staged reopening experienced stronger economic recovery compared with the countries that rushed into lifting the restrictive measures before the pandemic was under control. Postponing lifting the restrictions until after the pandemic’s peak was reached has a positive impact on economic activity. Governance also matters: a higher level of trust in government is associated with increased economic activity among countries that carried out a gradual reopening process. There is also suggestive evidence that providing people objective data on the progress of the pandemic may speed up the recovery process.

Keywords: Pandemic, COVID-19, economic impact, opening-up process, high-frequency data, Europe, Central Asia

JEL Classification: D14, E21, G51

Suggested Citation

Demirgüç-Kunt, Asli and Lokshin, Michael and Torre, Ivan, Opening-up Trajectories and Economic Recovery: Lessons after the First Wave of the COVID-19 Pandemic (November 24, 2020). World Bank Policy Research Working Paper No. 9480, Available at SSRN: https://ssrn.com/abstract=3740812 or http://dx.doi.org/10.2139/ssrn.3740812

Asli Demirgüç-Kunt

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Michael Lokshin

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-1772 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/mlokshin

Ivan Torre (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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