The Economic Effects of COVID-19 Containment Measures

By Pragyan Deb, Davide Furceri, Jonathan David Ostry, Nour Tawk

August 7, 2020

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Format: Chicago

Pragyan Deb, Davide Furceri, Jonathan David Ostry, and Nour Tawk. The Economic Effects of COVID-19 Containment Measures, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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 stay-at-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.

Subject: Central bank policy rate, COVID-19, Economic and financial statistics, Financial services, Fiscal policy, Fiscal stimulus, Health, Industrial production, Production

Keywords: Central bank policy rate, Containment measure, Containment measures, Containment measures to the spread of the virus, Costly containment measure, COVID-19, Different containment measure, Fiscal stimulus, Global, Industrial production, Measures to the spread, Measures to the spread of the virus, Monetary policy stimulus, Monetary policy support, Pandemics, Policy response, Public transport, Relaxation of containment measure, Stringency index, Time trend, Types containment, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/158
Stock No:

WPIEA2020158
ISBN:

9781513550251
ISSN:

1018-5941

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