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The impact of health and economic policies on the spread of COVID-19 and economic activity

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  • Famiglietti, Matthew
  • Leibovici, Fernando

Abstract

This paper empirically investigates the causal linkages between COVID-19 spread, government health containment and economic support policies, and economic activity in the U.S. up to the introduction of vaccines in early 2021. We model their joint dynamics as generated by a structural vector autoregression and estimate it using U.S. state-level data. We identify structural shocks to the variables by making assumptions on their short-run relation consistent with salient epidemiological and economic features of COVID-19. We isolate the direct impact of COVID-19 spread and policy responses on economic activity by controlling for demand fluctuations using disaggregate exports data. We find that health containment and economic support policies are highly effective at curbing the spread of COVID-19 without leading to a long-term contraction of economic activity.

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  • Famiglietti, Matthew & Leibovici, Fernando, 2022. "The impact of health and economic policies on the spread of COVID-19 and economic activity," European Economic Review, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:eecrev:v:144:y:2022:i:c:s0014292122000344
    DOI: 10.1016/j.euroecorev.2022.104087
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    Cited by:

    1. Luciana C. Fiorini & Wilfredo L. Maldonado, 2022. "Labor Supply in Pandemics Environments: An Aggregative Games Approach," Working Papers, Department of Economics 2022_18, University of São Paulo (FEA-USP).
    2. Zhenshan Yang & Jianan Wei & Quansheng Ge, 2023. "Friction or cooperation? Boosting the global economy and fighting climate change in the post-pandemic era," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    3. Suciu Marta-Christina & Mitucă Mircea-Ovidiu & Stativă Alexandru-Gheorghe & Bocăneală Ana-Maria & Mihai Dănuț-Georgian, 2022. "An empirical analysis of modern employees and their demands. How well-established enterprises cope with their expectations," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 16(1), pages 149-158, August.
    4. Laeven, Luc, 2022. "Pandemics, intermediate goods, and corporate valuation," Journal of International Money and Finance, Elsevier, vol. 120(C).
    5. Rong Fu & Luze Xie & Tao Liu & Juan Huang & Binbin Zheng, 2022. "Chinese Economic Growth Projections Based on Mixed Data of Carbon Emissions under the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(24), pages 1-16, December.
    6. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan H.W., 2023. "The Pandemic Push: Digital Technologies and Workforce Adjustments," IZA Discussion Papers 16062, Institute of Labor Economics (IZA).
    7. Cepparulo, Brian & Jump, Robert Calvert, 2022. "The impact of Covid-19 restrictions on economic activity: evidence from the Italian regional system," Greenwich Papers in Political Economy 37801, University of Greenwich, Greenwich Political Economy Research Centre.
    8. Bhaskar, Ratikant & Hunjra, Ahmed Imran & Bansal, Shashank & Pandey, Dharen Kumar, 2022. "Central Bank Digital Currencies: Agendas for future research," Research in International Business and Finance, Elsevier, vol. 62(C).

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    More about this item

    Keywords

    COVID-19; Health containment policies; Non-pharmaceutical interventions; Pandemics; Economic activity;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • E0 - Macroeconomics and Monetary Economics - - General
    • F1 - International Economics - - Trade

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