The COVID-19 global pandemic has caused significant global economic and social disruption. In McKibbin and Fernando (2020), we used data from historical pandemics to explore seven plausible scenarios of the economic consequences if COVID-19 were to become a global pandemic. In this paper, we use currently observed epidemiological outcomes across countries and recent data on sectoral shutdowns and economic shocks to estimate the likely global economic impacts of the pandemic under six new scenarios. The first scenario explores the outcomes if the current course of COVID-19 is successfully controlled, and there is only a mild recurrence in 2021. We then explore scenarios where the opening of economies results in recurrent outbreaks of various magnitudes and countries respond with and without economic shutdowns. We also explore the impact if no vaccine becomes available and the world must adapt to living with COVID-19 in coming decades. The final scenario is the case where a given country is in the most optimistic scenario (Scenario 1), but the rest of the world is in the most pessimistic scenario. The scenarios demonstrate that even a contained outbreak will significantly impact the global economy in the coming years. The economic consequences of the pandemic under plausible scenarios are substantial and the ongoing economic adjustment is far from over.
Fernando, R and W Mckibbin (2020), ‘Global macroeconomic scenarios of the COVID-19 pandemic‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390567
In the COVID-19 pandemic, lockdowns and containment measures were a fundamental tool to control the spread of the virus. In this article, we analyze data from 120 countries seeking to assess the stringency of de jure lockdown policies, comparing them with their de facto compliance and empirically analyzing the determinants of social distancing noncompliance. We find that, from a de jure perspective, almost all the strictest and longest lockdowns took place in emerging or developing economies. However, when analyzing its de facto compliance, we document a generalized and increasing non-compliance over time, which is significantly higher in emerging and developing economies. We show that lockdown compliance declines with time, and is lower in countries with stricter quarantines, lower incomes and higher levels of labor precariousness.
Levy Yeyati, E and S Luca (2020), ‘Take me out: De facto limits on strict lockdowns in developing countries‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390568
We estimate the effect of the coronavirus (COVID-19) pandemic on racial animus as measured by Google searches and Twitter posts, including a commonly used anti-Asian racial slur. Our empirical strategy exploits the plausibly exogenous variation in the timing of the first COVID-19 diagnosis across regions in the United States. We find that the first local diagnosis leads to an immediate increase in racist Google searches and Twitter posts, with the latter mainly due to existing Twitter users posting the slur for the first time. This increase could indicate a rise in future hate crimes as we document a strong correlation between the use of the slur and anti-Asian hate crimes using historic data. Moreover, we find that the rise in animosity is directed at Asians rather than other minority groups and is stronger in hours and on days when the connection between the disease and Asians is more salient, as proxied by the number of President Trumpâ€™s tweets mentioning China and COVID-19 simultaneously. In contrast, the negative economic impact of the pandemic plays little role in the initial increase in racial animus. Our results suggest that de-emphasizing the connection between the disease and a particular racial group can be effective in curbing current and future racial animus.
Lu, R and Y Sheng (2020), ‘From Fear to Hate: How the COVID-19 Pandemic Sparks Racial Animus in the United States‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390569
COVID-19 has uprooted many aspects of parentsâ€™ daily routines, from their jobs to their childcare arrangements. In this paper, we provide a novel description of how parents in England living in two-parent opposite-gender families are spending their time under lockdown. We find that mothersâ€™ paid work has taken a larger hit than that of fathersâ€™, on both the extensive and intensive margins. We find that mothers are spending substantially longer in childcare and housework than their partners and that they are spending a larger fraction of their paid work hours having to juggle work and childcare. Gender differences in the allocation of domestic work cannot be straightforwardly explained by gender differences in employment rates or earnings. Very large gender asymmetries emerge when one partner has stopped working for pay during the crisis: mothers who have stopped working for pay do far more domestic work than fathers in the equivalent situation do.
Andrew, A, S Cattan, M Costa Dias, C Farquharson, L Kraftman, S Krutikova, A Phimister and A Sevilla (2020), ‘The gendered division of paid and domestic work under lockdown‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390570
It is shown that the standard Susceptible Infectious Recovered model of an epidemic implies that there for a large set of epidemic parameter values there will be increasing returns to scale if the objective is to limit the economic cost of infection. The explanation is that if an epidemic has a high basic reproduction number, a given amount of social distancing will not have much effect. The same amount may however be very effective if the reproduction number is lower, (but still larger than one.)
Nævdal, E (2020), ‘Epidemics and increasing returns to scale on social distancing‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390571
The Scandinavian countries of Denmark, Iceland, Norway and Sweden have approached the first months of the 2020 novel coronavirus pandemic with a range of economic and health policies that have resulted in disparate outcomes. Though similar in behavioral norms and institutions, Denmark, Iceland and Norway chose a precautionary approach that formally shut down schools and businesses to protect human health, while Sweden took a Business-As-Usual (BAU) approach aimed at maintaining normal economic and social activities. Iceland and Denmark have further invested in testing, tracking and containing the disease. Economic costs of the pandemic and government fiscal and monetary interventions to reduce their impacts have been dramatic and similar across countries, while Sweden has had the most severe loss of life. Using a panel from the four countries since the beginning of the pandemic, we calculate lives saved from stricter interventions by estimating cases and deaths as functions of behavior and government interventions with a bioeconomic model, then estimating the additional lives lost if these interventions did not occur. Comparison of the countries reveals three important lessons for both policies aimed at the pandemic and broader goals with high uncertainty levels: (1) the precautionary approach can be lowest cost, while still expensive; (2) detection and monitoring (e.g. testing and tracking) are integral to a successful precautionary approach; and (3) expecting tradeoffs between economic activity and health creates a false dichotomy â€“ they are complements not substitutes. Pandemic policy should focus on minimizing expected costs and damages rather than attempting to exchange health and safety for economic well-being.
Echave-Sustaeta, L, C Horbel, H Jørgensen, B Kaiser, M Punt, E Roth and S Sølvsten (2020), ‘The Cost of Being Unprepared or the Benefit of the Precautionary Principle? Comparing Cost-Benefit COVID-19 Policies and Outcome‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390572
Social distancing measures have been introduced in many countries in response to the COVID-19 pandemic. The rate of compliance to these measures has varied substantially. We study how cultural differences can explain this variance using data on mobility in Swiss cantons between January and May 2020. We find that mobility declined after the outbreak but significantly less in the German-speaking region. Contrary to the evidence in the literature, we find that within the Swiss context, higher generalized trust in others is strongly associated with lower reductions in individual mobility. Additionally, support for a limited role of the state in matters of welfare is also found to be negatively associated with mobility reduction. We attribute our results to a combination of these cultural traits having altered the trade-off between the chance of contracting the virus and the costs associated with significant alterations of daily activities.
Deopa, N and P Fortunato (2020), ‘Coronagraben. Culture and social distancing in times of COVID-19‘, COVID Economics 39, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-39#392514_392915_390573