Lockdowns Need Geographic Coordination because of Propagation of Economic Effects through Supply Chains

28 Pages Posted: 11 Jan 2021 Last revised: 20 Jan 2021

See all articles by Hiroyasu Inoue

Hiroyasu Inoue

University of Hyogo - Graduate School of Simulation Studies

Yohsuke Murase

RIKEN Advanced Institute for Computational Science

Yasuyuki Todo

Waseda University

Date Written: January 4, 2021

Abstract

In order to prevent the spread of COVID-19, governments have often required regional or national lockdowns, which have caused extensive economic stagnation over broad areas as the shock of the lockdowns has diffused to other regions through supply chains. Using supply-chain data for 1.6 million firms in Japan, this study examines how governments can mitigate these economic losses when they are obliged to implement lockdowns. Through tests of all combinations of two-region lockdowns, we find that coordinated, i.e., simultaneous, lockdowns yield smaller GDP losses than uncoordinated lockdowns. Furthermore, we test practical scenarios in which Japan's 47 regions impose lockdowns over three months and find that GDP losses are lower if nationwide lockdowns are coordinated than if they are uncoordinated.

Keywords: COVID-19, lockdown, coordination, supply chains, simulation, propagation

JEL Classification: L14

Suggested Citation

Inoue, Hiroyasu and Murase, Yohsuke and Todo, Yasuyuki, Lockdowns Need Geographic Coordination because of Propagation of Economic Effects through Supply Chains (January 4, 2021). Available at SSRN: https://ssrn.com/abstract=3759523

Hiroyasu Inoue (Contact Author)

University of Hyogo - Graduate School of Simulation Studies ( email )

7-1-28 Minato-jima, Minami-machi
Chuo-ku
Kobe, Hyogo 650-0047
Japan

Yohsuke Murase

RIKEN Advanced Institute for Computational Science ( email )

7-1-26 Minatojima-Minamimachi
Chuo-ku, 650-0047
Japan

Yasuyuki Todo

Waseda University ( email )

1-104 Totsukamachi, Shinjuku-ku
tokyo, 169-8050
Japan

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