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The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes

Author

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  • Jonas E. Arias
  • Jesús Fernández-Villaverde
  • Juan F. Rubio-Ramirez
  • Minchul Shin

Abstract

We assess the causal impact of epidemic-induced lockdowns on health and macroeconomic outcomes and measure the trade-off between containing the spread of an epidemic and economic activity. To do so, we estimate an epidemiological model with time-varying parameters and use its output as information for estimating SVARs and LPs that quantify the causal effects of nonpharmaceutical policy interventions. We apply our approach to Belgian data for the COVID-19 epidemic during 2020. We find that additional government mandated mobility curtailments would have reduced deaths at a very small cost in terms of GDP

Suggested Citation

  • Jonas E. Arias & Jesús Fernández-Villaverde & Juan F. Rubio-Ramirez & Minchul Shin, 2022. "The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes," Working Papers 22-18, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:94590
    DOI: 10.21799/frbp.wp.2022.18
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    5. Arias, Jonas E. & Caldara, Dario & Rubio-Ramírez, Juan F., 2019. "The systematic component of monetary policy in SVARs: An agnostic identification procedure," Journal of Monetary Economics, Elsevier, vol. 101(C), pages 1-13.
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    Cited by:

    1. Hilde C. Bjørnland & Malin C. Jensen & Leif Anders Thorsrud, 2023. "Business Cycle and Health Dynamics during the COVID-19 Pandemic. A Scandinavian Perspective," Working Papers No 15/2023, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    2. Ida Johnsson & M. Hashem Pesaran & Cynthia Fan Yang, 2023. "Structural Econometric Estimation of the Basic Reproduction Number for Covid-19 across U.S. States and Selected Countries," CESifo Working Paper Series 10659, CESifo.
    3. Xiwen Bai & Jesús Fernández-Villaverde & Yiliang Li & Francesco Zanetti, 2024. "The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory," Economics Series Working Papers 1033, University of Oxford, Department of Economics.
    4. Christis Katsouris, 2023. "Structural Analysis of Vector Autoregressive Models," Papers 2312.06402, arXiv.org, revised Feb 2024.

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    More about this item

    Keywords

    Causality; Policy interventions; Epidemiological models; Bayesian estimation;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • I1 - Health, Education, and Welfare - - Health
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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