Policy Effectiveness on the Global COVID-19 Pandemic and Unemployment Outcomes: A Large Mixed Frequency Spatial Approach

98 Pages Posted: 7 Mar 2022 Last revised: 26 Jun 2022

See all articles by Xiaoyi Han

Xiaoyi Han

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE)

Yanli Zhu

Hohai University

Yijiong Zhang

National University of Singapore (NUS) - Department of Mathematics

Ying Chen

National University of Singapore (NUS) - Department of Mathematics

Date Written: March 4, 2022

Abstract

We measure the effectiveness of policies in a mixed frequency spatial VAR (MF-SVAR) modeling framework, conditional on the spillover and diffusion effects of the global pandemic and unemployment. Specifically, we examine two aspects of policy effectiveness from a spatio-temporal perspective, namely the impact of policy start dates and policy timeliness on Covid-19 weekly new case growth and monthly changes in unemployment rates for 68 countries across six continents from January 2020 to August 2021. We find that government policies have a significant impact on the growth of new cases, but only a marginal effect on the change in unemployment rates. A policy's start date is critical for its effectiveness. In terms of both immediate impact on the near term and total impact over the following four weeks, starting a policy in the 4th week of a month is most effective at reducing the growth of new cases. At the same time, starting in the 2nd or 3rd week can be counterproductive. In addition, our estimates suggest that the spillover and diffusion effects are much stronger than a country's temporal effect during a global pandemic, both for new case growth and changes in unemployment. We also find that new case growth influences changes in unemployment, but not vice versa. Counterfactual experiments provide further evidence of policy effectiveness in various scenarios and also reveal the main risk-vulnerable and risk-spillover countries during pandemic.

Keywords: Policy effectiveness, Spatio-temporal model, Mixed frequency, Spatial panel data

JEL Classification: C33, C55, C11

Suggested Citation

Han, Xiaoyi and Zhu, Yanli and Zhang, Yijiong and Chen, Ying, Policy Effectiveness on the Global COVID-19 Pandemic and Unemployment Outcomes: A Large Mixed Frequency Spatial Approach (March 4, 2022). Available at SSRN: https://ssrn.com/abstract=4049509 or http://dx.doi.org/10.2139/ssrn.4049509

Xiaoyi Han

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

Yanli Zhu

Hohai University ( email )

8 Focheng West Road
Jiangning District
Nanjing, Jiangsu 211100
China

Yijiong Zhang (Contact Author)

National University of Singapore (NUS) - Department of Mathematics ( email )

119076
Singapore

Ying Chen

National University of Singapore (NUS) - Department of Mathematics ( email )

119076
Singapore

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