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International Monetary Fund. Research Dept.

through higher future economic activity, possibly even leading to positive net effects on the economy. This remains a crucial area for future research as more data become available. Individual Lockdown Measures and Nonlinear Effects So far, the analysis has used a lockdown stringency index that combines a broad range of underlying measures. These include, for example, travel restrictions, school and workplace closures, and stay-at-home orders. Disentangling the effects of these measures is an arduous task because they are highly correlated, as countries often

International Monetary Fund. Research Dept.

Abstract

The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

International Monetary Fund. Research Dept.

Abstract

The authors of this chapter are Philip Barrett, Christian Bogmans, Benjamin Carton, Johannes Eugster, Florence Jaumotte (lead), Adil Mohommad, Evgenia Pugacheva, Marina M. Tavares, and Simon Voigts, in collaboration with external consultants Warwick McKibbin and Weifeng Liu for modeling simulations, and with contributions from Thomas Brand. Srijoni Banerjee, Eric Bang, and Jaden Kim provided research support, and Daniela Rojas Fernandez provided editorial assistance.

Diego A. Cerdeiro and Andras Komaromi

very grateful to Helge Berger, Joong Shik Kan, and Martin Kaufman for many helpful discussions. We also thank Fan (Mike) Zhang for kindly sharing his lockdown stringency index for China, and Davide Furceri for very detailed comments. ♣ Diego A. Cerdeiro: IMF, Asia and Pacific Department; Andras Komaromi: IMF, Innovation Lab Unit. 1 For a review of this literature, see Chapter 2 of the 2020 October World Economic Outlook ( IMF, 2020 ) or Brodeur, Gray, Islam, and Bhuiyan (2020) . 2 See, e.g., “World Economy Shudders as Coronavirus Threatens Global

Francesca G Caselli, Mr. Francesco Grigoli, Weicheng Lian, and Mr. Damiano Sandri

20 15 countries. Table A.1: Data Sources Indicator Source Contact tracing Oxford COVID-19 Government Response Tracker COVID-19 cases Oxford COVID-19 Government Response Tracker Humidity Air Quality Open Data Platform Lockdown stringency index Oxford COVID-19 Government Response Tracker Mobility Google Community Mobility Reports, Baidu for China Stock of job postings Indeed Temperature Air Quality Open Data Platform Testing Oxford COVID-19 Government Response Tracker

Francesca G Caselli, Mr. Francesco Grigoli, Weicheng Lian, and Mr. Damiano Sandri

examine if the effect of lockdowns depends on the stage of the country’s epidemic. We do so by modifying the regression framework in equation (1) to allow for an interaction term between the lockdown stringency index and the number of daily COVID-19 cases: m o b i , t + h = α i h + τ t h + ∑ p = 0 P β p h l n Δ c a s e s i , t − p + ∑ p = 0 P δ

Francesca G Caselli, Mr. Francesco Grigoli, Mr. Damiano Sandri, and Mr. Antonio Spilimbergo

school closures on parents’ mobility. 8 These criteria lead to the exclusion of Bergamo, Brescia, Lodi, Milan, Torino, and Rome in Italy; Barcelona and Madrid in Spain; and Área Metropolitana do Lisboa, Área Metropolitana do Porto, Cávado, and Região de Aveiro, Tâmega e Sousa in Portugal. Adding these areas back into the sample does not affect the results as shown in the robustness section. 9 We use the lockdown stringency index provided by the University of Oxford’s Coronavirus Government Response Tracker. This index is a simple average of nine sub

Francesca G Caselli, Mr. Francesco Grigoli, Weicheng Lian, and Mr. Damiano Sandri
Using high-frequency proxies for economic activity over a large sample of countries, we show that the economic crisis during the first seven months of the COVID-19 pandemic was only partly due to government lockdowns. Economic activity also contracted because of voluntary social distancing in response to higher infections. We also show that lockdowns can substantially reduce COVID-19 infections, especially if they are introduced early in a country's epidemic. Despite involving short-term economic costs, lockdowns may thus pave the way to a faster recovery by containing the spread of the virus and reducing voluntary social distancing. Finally, we document that lockdowns entail decreasing marginal economic costs but increasing marginal benefits in reducing infections. This suggests that tight short-lived lockdowns are preferable to mild prolonged measures.
Francesca G Caselli, Mr. Francesco Grigoli, Mr. Damiano Sandri, and Mr. Antonio Spilimbergo
Lockdowns and voluntary social distancing led to significant reduction in people’s mobility. Yet, there is scant evidence on the heterogeneous effects across segments of the population. Using unique mobility indicators based on anonymized and aggregate data provided by Vodafone for Italy, Portugal, and Spain, we find that lockdowns had a larger impact on the mobility of women and younger cohorts. Younger people also experienced a sharper drop in mobility in response to rising COVID-19 infections. Our findings, which are consistent across estimation methods and robust to a variety of tests, warn about a possible widening of gender and inter-generational inequality and provide important inputs for the formulation of targeted policies.