We document a number of striking features about the initial impact of the pandemic on local commerce across 16 US cities. There are two novel contributions from this analysis: exploration of neighborhood-level effects and shifts between offline and online purchasing channels. In our analysis we use approximately 450 million credit card transactions per month from a rolling sample of 11 million anonymized customers between October 2019 and March 2020. Across the 16 cities we profile, consumers decreased spend on the set of goods and services we define as ``local commerce" by 12.8% between March 2019 and March 2020. Growth in all 16 cities was negative. Consumers shifted a substantial share of local commerce spend online, such that year over-year growth in online spend was small, but positive, at 1.5%. With respect to grocery and pharmacy purchases, online spend grew at least three times as fast as offline spend. Overall spend declines were uniform across neighborhoods of differing median household income, though lower-income neighborhoods experienced the highest proportion of extreme negative declines. We also find evidence that many low-income neighborhoods are increasing spend on online grocery slower than others, but increasing their use of online restaurants the fastest. Consumers in low-income neighborhoods also tend to live farther from the grocery stores at which they shop. Compared to their counterparts in higher-income neighborhoods, consumers in low-income neighborhoods have not been more likely to shop at grocery stores closer to where they live since the onset of the pandemic.
Farrell, D, L Relihan, M Ward and C Wheat (2020), ‘The Early Impact of COVID-19 on Local Commerce: Changes in Spend Across Neighborhoods and Online‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390509
During the COVID-19 crisis, while the world economy suffered the worst crisis since the Great Depression, the reactions of stock markets have raised concerns. Several economists (including some Nobel laureates) have seen these reactions as evidence that stock markets are not fully efficient, while others have emphasized the difficulty of assessing the dramatic flow of information about the pandemic and its economic consequences. In this paper, we assess how stock markets have integrated public information about the COVID-19, the subsequent lockdowns and the policy reactions. Although the COVID-19 shock has been global, not all countries have been impacted in the same way, and they have not reacted in the same way. We take advantage of this strong heterogeneity. We consider a panel of 74 countries with daily information about the health and economic crisis, from January to April 2020. Stock market reaction can be summarized as follows. 1) Stock markets initially ignored the pandemic (until Feb. 21), before reacted strongly to the growing number of infected people (Feb.?23 to Mar. 20), while volatility surged and concerns about the pandemic arose; following the intervention of central banks (Mar. 23 to Apr. 30), however, shareholders no longer seemed troubled by news of the health crisis, as prices rebound all around the world. 2) Country-specific characteristics appear to have had no influence on stock market response. 3) Investors were sensitive to the number of COVID-19 cases in neighbouring and wealthy countries. 4) Credit facilities and government guarantees, lower policy interest rates, and lockdown measures mitigated the decline in domestic stock prices. Overall, these results suggest that stock markets have been less sensitive to each countryâ€™ macroeconomic fundamentals prior the crisis, than to their short-term reaction during the crisis. However, our selected variables explain only a small part of the stock market variations, so it is hard to deny that the link between stock price movements and fundamentals have been anything other than loose.
Capelle-Blancard, G and A Desroziers (2020), ‘The stock market is not the economy? Insights from the COVID-19 crisis‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390510
Evidence from past economic crises indicates that recessions often affect menâ€™s and womenâ€™s employment differently, with a greater impact on male-dominated sectors. The current COVID-19 crisis presents novel characteristics that have affected economic, health and social phenomena over wide swaths of the economy. Social distancing measures to combat the spread of the virus, such as working from home and school closures, have placed an additional tremendous burden on families. Using new survey data collected in April 2020 from a representative sample of Italian women, we analyse jointly the effect of COVID-19 on the working arrangements, housework and childcare of couples where both partners work. Our results show that most of the additional workload associated to COVID-19 falls on women while childcare activities are more equally shared within the couple than housework activities. According to our empirical estimates, changes to the amount of housework done by women during the emergency do not seem to depend on their partnersâ€™ working arrangements. With the exception of those continuing to work at their usual place of work, all of the women surveyed spend more time on housework than before. In contrast, the amount of time men devote to housework does depend on their partnersâ€™ working arrangements: men whose partners continue to work at their usual workplace spend more time on housework than before. The link between time devoted to childcare and working arrangements is more symmetric, with both women and men spending less time with their children if they continue to work away from home. For home schooling, too, parents who continue to go to their usual workplace after the lockdown are less likely to spend greater amounts of time with their children than before. Finally, analysis of work-life balance satisfaction shows that working women with children aged 0-5 are those who say they find balancing work and family more difficult during COVID-19. The work-life balance is especially difficult to achieve for those with partners who continue to work outside the home during the emergency.
Del Boca, D, N Oggero, P Profeta and M Rossi (2020), ‘Women’s Work, Housework and Childcare, before and during COVID-19‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390816
Using longitudinal microdata for the UK over the period 2009-2020 we control for pre-existing previous trends in mental health in order to isolate and quantify the effects of the Covid-19 pandemic. Mental health in the UK worsened by 8.1% on average as a result of the pandemic and by much more for young adults and for women which are groups that already had lower levels of mental health before Covid-19. Hence inequalities in mental health have been increased by the pandemic. Even larger effects are observed for measures of mental health that capture the number of problems reported or the fraction of the population reporting any frequent or severe problems, which more than doubled.
Banks, J and X Xu (2020), ‘The mental health effects of the first two months of lockdown and social distancing during the Covid-19 pandemic in the UK‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390511
This paper uses novel and comprehensive data on electronic payments from SIBS, the main provider of point of sale terminals and on-line payments in Portugal, to study the impact of the Great Lockdown on purchases. The data aggregates all individual transactions into monthly observations, by municipality and sector, between 2018 and 2020. We employ a difference-in-differences event study that relies on the assumption that the monthly evolution of purchases in the first four months of 2020 would be parallel to that of the two previous years. We identify a massive causal impact on overall purchases, from a baseline year-on-year monthly growth rate of 10% to a decrease of 45%. The sign and magnitude of the impact varies considerably across sectors. Purchases of essential goods such as supermarkets and groceries increase mildly, contrasting with severe contractions in sectors that were closed by government order or depend heavily on tourism, including the leisure industry and restaurants. We find suggestive evidence of initial stockpiling of goods, postponing of essential expenditures, and rapid recovery of purchases in tech and entertainment, possibly to adapt to the confinement. Transactions with foreign-owned cards cause an even greater negative contraction. We disentangle the total effect into the intensive margin of the average transaction and the extensive margin of the number of transactions. Buyers adjust their shopping strategies in rational ways to minimize public health risks: they go less often to supermarkets and buy more each time, and visit local groceries more.
Carvalho, B, J dos Santos and S Peralta (2020), ‘What and how did people buy during the Great Lockdown? Evidence from electronic payments‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390512
Reminders to promote social distancing have been ubiquitous throughout the COVID-19 crisis, but little is known about their effectiveness. Existing studies find positive impacts on intentions to comply, but no evidence exists of actual behavioural change. We conduct a randomised controlled trial with a representative sample of Danish residents, who receive different versions of a reminder to stay home as much as possible at the height of the crisis. We measure impacts on both intentions to comply and on actions in the following days (i.e., whether subjects report having stayed home in a follow-up survey). We find that the reminder significantly increases peopleâ€™s intentions to stay home when it emphasises the consequences of non-compliance for the respondent or his/her family, while it has no impact when the emphasis is on other people or the country as a whole. Changes in intentions, however, translate into weaker changes in actions that are not statistically significant, despite potential concerns of self-reported compliance being overstated. This is consistent with the existence of important intention-to-action gaps. Only people who are in relatively poor health are significantly more likely to stay home after receiving the reminder with an emphasis on personal and family risks. This shows that while reminders may be useful to protect groups at risk by increasing their own compliance with social distancing, such a tool has no significant impact on the behaviour of those who face limited personal risks but could spread the disease.
Falco, P and S Zaccagni (2020), ‘Promoting social distancing in a pandemic: Beyond the good intentions‘, COVID Economics 28, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-28#392514_392904_390513