Economic Costs of Distancing Policy Interventions

Rácz, Olivér Miklós (2023) Economic Costs of Distancing Policy Interventions. Working Paper. Corvinus University of Budapest, Budapest.

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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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