Regional Policy Spillovers and Complementarity in the Great Lockdown
23 Pages Posted: 26 Apr 2021
Date Written: April 26, 2021
Nonpharmaceutical interventions (NPIs) are the primary measures to control pandemics. Should regional governments coordinate in implementing NPIs? If so, how? The answers depend on spatial spillovers and complementarity or substitutability of regional NPIs. This paper estimates the spillover effects of stay-at-home (SAH) orders on the COVID-19 infection growth across adjacent counties on the state borders in the United States. We find that the spillover effects critically depend on the local implementation of SAH orders. With local SAH orders, the spillover effects reduce the daily case growth rate by 5.1 percentage points in the first three weeks of treatment, with an accumulative case reduction of 66.6 percent; otherwise, the spillover effects slightly increase the growth rate though statistically insignificant. Such strong complementarity in reducing infections is in contrast to previous findings of substitutability in changing mobility. Our results suggest that NPIs are best implemented jointly, and there may be coordination failures among decentralized regional governments.
Keywords: pandemics, COVID-19, lockdown, stay at home, social distancing, spillover, complementarity
JEL Classification: H0, I10
Suggested Citation: Suggested Citation