Research on economic impact of social-distancing measures in the context of the epidemic–empirical evidence from high frequency data of four municipalities

The global spread of the novel coronavirus (COVID-19), originating from the epidemic, has extensively disrupted global supply and demand, resulting in the most severe economic downturn witnessed in over a century. This research examines the economic implications of social-distancing measures implemented during the epidemic in four Chinese municipalities. Using high-frequency proxy indicators such as economic activity, nitrogen dioxide concentrations, nighttime light intensity data and population movement records, the study uncovers an elasticity of 0.53 between nitrogen dioxide concentration concentrations and economic growth. The findings indicate that social distancing measures result in an average reduction of 11.7–15.5% in nitrogen dioxide concentrations across entire regions, correlating with a 6.2–8.2% decline in economic activity in high NO2-emitting industries like the industrial and manufacturing sectors. Additionally, this study employs nighttime light intensity as a proxy for economic activity in low NO2-emitting industries, such as services, revealing that full lockdowns lead to an average 5.6% reduction in nighttime light intensity, equating to about a 5.1% decrease in overall output. Furthermore, the evidence shows that the economic impact of these measures is considerably less than the direct economic consequences of the epidemic. It has also been observed that quicker implementation of social isolation measures results in a more moderate economic impact.