The Great Lockdown: dissecting the economic effects

Martedì, 20 ottobre 2020, ore 14.15

Autore:  Francesca Caselli (Economist at the International Monetary Fund, Research Department, World Economic Studies Division)

To contain the coronavirus (COVID-19) pandemic and protect susceptible populations, most countries impose stringent lockdown measures in the first half of 2020. Meanwhile, economic activity contracted dramatically on a global scale. This chapter aims to dissect the nature of the economic crisis in the first seven months of the pandemic. It finds that the adoption of lockdowns was an important factor in the recession, but voluntary social distancing in response to rising infections also contributed very substantially to the economic contraction. Therefore, although easing lockdowns can lead to a partial recovery, economic activity is likely to remain subdued until health risks abate. Meanwhile, countries should protect the most vulnerable and find ways to support economic activity compatible with social distancing, for example, by reducing contact intensity in the workplace and enhancing work from home where possible. This chapter also provides new evidence of the uneven effects of lockdowns, which are found to have a larger impact on the mobility of women and younger cohorts. This calls for targeted policy action to prevent a widening of inequality. Finally, the analysis shows that lockdowns can substantially reduce COVID-19infections, especially if they are introduced early in the country's epidemic and are sufficiently tight. Thus, despite involving short-term economic costs, lockdowns may pave the way to a faster recovery by containing the spread of the virus and reducing the need for voluntary social distancing over time, possibly having positive overall effects on the economy. This remains an important area for future research as new data become available.   

[Ultimo aggiornamento: 15/10/2020 16:55:59]