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What Happened to the US Economy During the 1918 Influenza Pandemic? A View Through High-Frequency Data

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  • Francois R. Velde

Abstract

Burns and Mitchell (1946, 109) found a recession of “exceptional brevity and moderate amplitude.” I confirm their judgment by examining a variety of high-frequency, aggregate and cross-sectional data. Industrial output fell sharply but rebounded within months. Retail seemed little affected and there is no evidence of increased business failures or stressed financial system. Cross-sectional data on manufacturing employment indicates that most of the recession, brief as it was, was due to the Armistice rather than the epidemic. Data from the nationwide coal industry documents the sharp but short-lived impact of the epidemic on labor supply and the lack of spill-overs on demand. City-level economic indicators show that the (brief) interventions to hinder the contagion reduced mortality at little economic cost because reduced infections mitigated the impact on the labor force.

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  • Francois R. Velde, 2020. "What Happened to the US Economy During the 1918 Influenza Pandemic? A View Through High-Frequency Data," Working Paper Series WP-2020-11, Federal Reserve Bank of Chicago, revised 07 Jul 2020.
    • Handle: RePEc:fip:fedhwp:92752
    DOI: 10.21033/wp-2020-11
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    3. Zhao, Zichao & Li, Dexuan & Dai, Wensheng, 2023. "Machine-learning-enabled intelligence computing for crisis management in small and medium-sized enterprises (SMEs)," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    4. Jedwab, Remi & Khan, Amjad M. & Russ, Jason & Zaveri, Esha D., 2021. "Epidemics, pandemics, and social conflict: Lessons from the past and possible scenarios for COVID-19," World Development, Elsevier, vol. 147(C).
    5. Constantin Bürgi & Nisan Gorgulu, 2020. "Social Distancing and the Economic Impact of Covid-19 in the United States," CESifo Working Paper Series 8577, CESifo.
    6. Doran, Áine & Colvin, Christopher L. & McLaughlin, Eoin, 2024. "What can we learn from historical pandemics? A systematic review of the literature," Social Science & Medicine, Elsevier, vol. 342(C).
    7. Daniel de Kadt & Johan Fourie & Jan Greyling & Elie Murard & Johannes Norling, 2021. "Correlates and Consequences of the 1918 Influenza in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 89(2), pages 173-195, June.
    8. Ilan Noy & Tomáš Uher, 2022. "Economic consequences of pre-COVID-19 epidemics: a literature review," Chapters, in: Mark Skidmore (ed.), Handbook on the Economics of Disasters, chapter 7, pages 117-133, Edward Elgar Publishing.
    9. Guillaume Chapelle, 2022. "The medium-term impact of non-pharmaceutical interventions. The case of the 1918 influenza in US cities," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(109), pages 43-81.
    10. Edward L. Glaeser, 2021. "Urban Resilience," NBER Working Papers 29261, National Bureau of Economic Research, Inc.
    11. Garriga, Carlos & Manuelli, Rody & Sanghi, Siddhartha, 2022. "Optimal management of an epidemic: Lockdown, vaccine and value of life," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    12. Barro, Robert J., 2022. "Non-pharmaceutical interventions and mortality in U.S. cities during the great influenza pandemic, 1918–1919," Research in Economics, Elsevier, vol. 76(2), pages 93-106.
    13. Eichengreen, Barry & Park, Donghyun & Shin, Kwanho, 2021. "The shape of recovery: Implications of past experience for the duration of the COVID-19 recession," Journal of Macroeconomics, Elsevier, vol. 69(C).
    14. Philipp Ager & Katherine Eriksson & Ezra Karger & Peter Nencka & Melissa A. Thomasson, 2024. "School Closures during the 1918 Flu Pandemic," The Review of Economics and Statistics, MIT Press, vol. 106(1), pages 266-276, January.
    15. Ali Mofleh ALSHAHRANI, 2022. "Cost–Benefit Analysis of Interventions to Mitigate the Monkeypox Virus," IJERPH, MDPI, vol. 19(21), pages 1-12, October.
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    17. Julian Kozlowski & Laura Veldkamp & Venky Venkateswaran, 2020. "Scarring Body and Mind: The Long-Term Belief-Scarring Effects of COVID-19," NBER Working Papers 27439, National Bureau of Economic Research, Inc.
    18. Lorena Skufi & Adam Geršl, 2023. "Using Macrofinancial Models to Simulate Macroeconomic Developments During the COVID-19 Pandemic: The Case of Albania," Eastern European Economics, Taylor & Francis Journals, vol. 61(5), pages 517-553, September.
    19. Dylan Balla‐Elliott & Zoë B. Cullen & Edward L. Glaeser & Michael Luca & Christopher Stanton, 2022. "Determinants Of Small Business Reopening Decisions After Covid Restrictions Were Lifted," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(1), pages 278-317, January.
    20. Guillaume Chapelle, 2020. "The medium-term impact of non-pharmaceutical interventions. The case of the 1918 influenza in US cities," Working Papers hal-03389177, HAL.
    21. Remi Jedwab & Amjad M. Khan & Richard Damania & Jason Russ & Esha D. Zaveri, 2020. "Pandemics, Poverty, and Social Cohesion: Lessons from the Past and Possible Solutions for COVID-19," Working Papers 2020-13, The George Washington University, Institute for International Economic Policy.
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    More about this item

    Keywords

    1918 influenza epidemic; US economy; business cycles; recession; non-pharmaceutical interventions;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I19 - Health, Education, and Welfare - - Health - - - Other

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