The COVID-19 pandemic has already led to dramatic policy responses in most advanced economies, and in particular sustained lockdowns matched with sizable transfers to much of the workforce. This paper provides a preliminary quantitative analysis of how aggregate policy responses should differ in developing countries. To do so we build an incomplete-markets macroeconomic model with epidemiological dynamics that features several of the main economic and demographic distinctions between advanced and developing economies relevant for the pandemic. We focus in particular on differences in population structure, fiscal capacity, healthcare capacity, the prevalence of â€˜hand-to-mouthâ€™ households, and the size of the informal sector. The model predicts that blanket lockdowns are generally less effective in developing countries at reducing the welfare costs of the pandemic, saving fewer lives per unit of lost GDP. Â Age-specific lockdown policies, on the other hand, may be even more potent in developing countries, saving more lives per unit of lost output than in advanced economies.
Alon, T, M Kim, D Lagakos and M VanVuren (2020), ‘How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World?‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390472
I use simple correlations and regression analysis to study how the number of confirmed Covid-19 cases and the number of deaths with Covid-19 per 100,000 people is related with the socioeconomic characteristics of local areas in England and Wales. I find that local areas that have larger households, worse levels of self-reported health and a larger fraction of people using public transport have more Covid-19 infections per 100,000 people. For mortality, household size and use of public transport are less important, but there is a clear relation with age, ethnicity and self-reported health. Local areas with an older population, a larger share of black or Asian population and worse levels of self-reported health have more Covid-19 deaths per 100,000 people. The relation between self-reported health and infections and mortality suggests that encouraging a healthy lifestyle can help prevent the spread of infection and reduce mortality. Also, as many countries now begin to relax lockdown measures, policymakers should pay particular attention to reducing the risk of infection in public transport.
Sá, F (2020), ‘Socioeconomic Determinants of Covid-19 Infections and Mortality: Evidence from England and Wales‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_391037
Policy makers responding to COVID-19 need to know people's relative valuation of health over wealth. Loosening and tightening lockdowns moves a society along a (perceived) health-wealth trade-off and the associated changes have to accord with the public's relative valuation of health and wealth for maximum compliance. In our survey experiment (N=4,618), we randomize information provision on economic and health costs to assess public preferences over this trade-off in the UK and the US. People strongly prioritize health over wealth, but the treatment effects suggest these priorities will change as experience of COVID-19 deaths and income losses evolves. Information also has heterogeneous/polarizing effects. These results encourage policy caution. Individual differences in health-wealth valuation highlight this study's importance because they map onto compliance with current lockdown measures.
Hargreaves Heap, S, C Koop, K Matakos, A Unan and N Weber (2020), ‘COVID-19 and peoples' health-wealth preferences: information effects and policy implications‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390473
The COVID-19 pandemic and social-distancing as well as stay-at-home orders can directly affect mental health and quality of life. In this ongoing project, we analyze rich data from Telefonseelsorge, the largest German emergency helpline service, to better understand the effect of the pandemic and of local lockdown measures on mental healthâ€“related helpline contacts. First, looking at Germanyâ€“wide changes, we find that overall helpline contacts increase by around 25% in the first week of the lockdown and slowly decrease again after the third lockdown week. Our results suggest that the increase is not driven by financial worries or fear of the virus itself, but reflects heightened loneliness, anxiety, and suicidal ideation. Second, we exploit spatial variation in policies among German federal states to assess whether the effect depends on the stringency of local measures. Preliminary evidence suggests that the average effect is more pronounced in states that implemented stricter measures.
Armbruster, S and V Klotzbuecher (2020), ‘Lost in Lockdown? Covid-19, Social Distancing, and Mental Health in Germany‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390474
This paper examines the impact of the Severe Acute Respiratory Syndrome (SARS) epidemic on China's trade. Using quarterly transaction-level trade data of all Chinese firms, we find that firms in regions with local transmission of SARS experienced lower import and export growth at both the intensive and extensive margins, compared to those in the unaffected regions. The affected firms' trade growth remained lower two years after SARS. Products that are more capital-intensive, skill-intensive, upstream in the supply chains, and differentiated experienced a smaller export decline but a stronger recovery. Small exporters were more likely to exit, slowing down trade recovery.
Fernandes, A and H Tang (2020), ‘How did the 2003 SARS epidemic shape Chinese trade?‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390475
The Austrian ski resort of Ischgl is commonly claimed to be ground zero for the diffusion of the SARS-CoV-2 virus across Germany. Drawing on data for 401 German counties, we find that conditional on geographical latitude and testing behavior by health authorities, road distance to Ischgl is indeed an important predictor of infection cases, but â€” in line with expectations â€” not of fatality rates. Were all German counties located as far from Ischgl as the most distant county of Vorpommern-RÃ¼gen, Germany would have seen about 48% fewer COVID-19 cases. A simple diffusion model predicts that the absolute value of the distance-to-Ischgl elasticity should fall over time when inter- and intra-county mobility are unrestricted. We test this hypothesis and conclude that the German lockdown measures have halted the spread of the virus.
Chowdhry, S, G Felbermayr and J Hinz (2020), ‘Apres-ski: The Spread of Coronavirus from Ischgl through Germany‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390476
This paper examines the impact of the COVID-19 pandemic on commercial real estate prices. We construct a novel measure of listed commercial real estate (CRE) portfoliosâ€™ exposure to the growth in COVID-19 cases using a large, granular sample of firmsâ€™ individual commercial property holdings. We document a negative relationship between this geographically weighted case growth and risk-adjusted returns. However, there is substantial variation across property types: the retail and hospitality sectors react the most negatively while technology sector reacts positively to the exposure of their portfolios to growth in COVID-19 cases. After conditioning on the property type focus of a firm, days since the beginning of the portfolioâ€™s exposure to the outbreak, the weighted-average population density of the counties in which the portfolio manager is invested, and the extent to which the portfolio is concentrated by property type and geography, other firm characteristics have little effect on the negative stock price impact of the pandemic. Despite negative short-term market reactions, our findings suggest that the sensitivity of CRE returns to increases in reported COVID-19 cases is reduced after announcements of stay-at home orders and state of emergency declarations. We argue that the effects of COVID-19 that we observe in highly liquid stock markets are indicative of pricing effects occurring in private CRE markets.
Ling, D, C Wang and T Zhou (2020), ‘A First Look at the Impact of COVID19 on Commercial Real Estate Prices: Asset Level Evidence‘, COVID Economics 22, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-22#392514_392898_390477