Rácz, Olivér Miklós (2023) Economic Costs of Distancing Policy Interventions. Working Paper. Corvinus University of Budapest, Budapest.
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Abstract
Distancing policy interventions (DPIs) were aimed at containing the COVID-19 pandemic, but they also likely affected economic activity. This paper estimates the effects of DPIs on selected indicators of monthly economic activity, such as industrial and manufacturing production, construction output, retail trade, inflation, and unemployment. The main contribution of this paper is the isolation of the causal effects of distancing interventions from the effects of voluntary distancing. I use mobility data as a measure of distancing to identify DPI effects on mobility in a regression discontinuity design, specifically as immediate changes in distancing right after the intervention. This strategy identifies the unobserved voluntary component of distancing as well, which is a key control variable in the identification of the economic effects of DPIs. I find significant output losses due to DPIs, but no evidence for inflationary or unemployment effects. Results also show that although voluntary distancing caused significant output losses, their effect was an order of magnitude smaller than that of DPIs.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Series Name: | Corvinus Economics Working Papers - CEWP |
| Series Number / Identification Number: | 2023/04 |
| Uncontrolled Keywords: | COVID-19, non-pharmaceutical interventions, causal identification, regression-discontinuity-in-time |
| JEL classification: | C30 - Multiple or Simultaneous Equation Models; Multiple Variables: General C33 - Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models C43 - Index Numbers and Aggregation; Leading indicators C54 - Quantitative Policy Modeling E23 - Macroeconomics: Production E24 - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital E65 - Studies of Particular Policy Episodes H10 - Structure and Scope of Government: General H12 - Crisis Management H30 - Fiscal Policies and Behavior of Economic Agents: General H84 - Disaster Aid I10 - Health: General I12 - Health Production I18 - Health: Government Policy; Regulation; Public Health |
| Divisions: | Institute of Economics |
| Subjects: | Mathematics, Econometrics Social welfare, insurance, health care |
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| ID Code: | 8157 |
| Deposited By: | Ádám Hoffmann |
| Deposited On: | 05 May 2023 08:03 |
| Last Modified: | 05 May 2023 08:03 |
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