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How Did State Reopenings Affect Small Businesses?

Author

Listed:
  • Rajashri Chakrabarti
  • Sebastian Heise
  • Davide Melcangi
  • Maxim L. Pinkovskiy
  • Giorgio Topa

Abstract

In our previous post, we looked at the effects that the reopening of state economies across the United States has had on consumer spending. We found a significant effect of reopening, especially regarding spending in restaurants and bars as well as in the healthcare sector. In this companion post, we focus specifically on small businesses, using two different sources of high-frequency data, and we employ a methodology similar to that of our previous post to study the effects of reopening on small business activity along various dimensions. Our results indicate that, much like for consumer spending, reopenings had positive and significant effects in the short term on small business revenues, the number of active merchants, and the number of employees working in small businesses. It is important to stress that we are not expressing any views in this post on the normative question of whether, when, or how states should loosen or tighten restrictions aimed at controlling the COVID-19 pandemic.

Suggested Citation

  • Rajashri Chakrabarti & Sebastian Heise & Davide Melcangi & Maxim L. Pinkovskiy & Giorgio Topa, 2020. "How Did State Reopenings Affect Small Businesses?," Liberty Street Economics 20200921, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:88734
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    More about this item

    Keywords

    state reopenings; COVID-19; small businesses; revenues; employment;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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