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Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains?

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  • Hiroyasu Inoue
  • Yohsuke Murase
  • Yasuyuki Todo

Abstract

To prevent the spread of COVID-19, many cities, states, and countries have `locked down', restricting economic activities in non-essential sectors. Such lockdowns have substantially shrunk production in most countries. This study examines how the economic effects of lockdowns in different regions interact through supply chains, a network of firms for production, simulating an agent-based model of production on supply-chain data for 1.6 million firms in Japan. We further investigate how the complex network structure affects the interactions of lockdowns, emphasising the role of upstreamness and loops by decomposing supply-chain flows into potential and circular flow components. We find that a region's upstreamness, intensity of loops, and supplier substitutability in supply chains with other regions largely determine the economic effect of the lockdown in the region. In particular, when a region lifts its lockdown, its economic recovery substantially varies depending on whether it lifts lockdown alone or together with another region closely linked through supply chains. These results propose the need for inter-region policy coordination to reduce the economic loss from lockdowns.

Suggested Citation

  • Hiroyasu Inoue & Yohsuke Murase & Yasuyuki Todo, 2020. "Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains?," Papers 2009.06894, arXiv.org, revised Jan 2021.
  • Handle: RePEc:arx:papers:2009.06894
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    2. Wang, Richard & Ye, Zhongnan & Lu, Miaojia & Hsu, Shu-Chien, 2022. "Understanding post-pandemic work-from-home behaviours and community level energy reduction via agent-based modelling," Applied Energy, Elsevier, vol. 322(C).
    3. Snellman, Jan E. & Barrio, Rafael A. & Kaski, Kimmo K. & Käpylä, Maarit J., 2022. "Modelling the interplay between epidemics and regional socio-economics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 604(C).
    4. Yasuyuki Todo & Keita Oikawa & Masahito Ambashi & Fukunari Kimura & Shujiro Urata, 2021. "Robustness and Resilience of Supply Chains During the COVID-19 Pandemic: Findings from a Questionnaire Survey on the Supply Chain Links of Firms in ASEAN and India," Working Papers DP-2021-40, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Eiji Yamamura & Youki Kosaka & Yoshiro Tsutsui & Fumio Ohtake, 2022. "Gender differences of the effect of vaccination on perceptions of COVID-19 and mental health in Japan," Papers 2203.07663, arXiv.org.

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