IMF Working Papers

The Economic Effects of COVID-19 Containment Measures

Author/Editor:

Pragyan Deb ; Davide Furceri ; Jonathan David Ostry ; Nour Tawk

Publication Date:

August 7, 2020

Electronic Access:

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Summary:

Containment measures are crucial to halt the spread of the 2019 COVID-19 pandemic but entail large short-term economic costs. This paper tries to quantify these effects using daily global data on real-time containment measures and indicators of economic activity such as Nitrogen Dioxide (NO2) emissions, flights, energy consumption, maritime trade, and mobility indices. Results suggest that containment measures have had, on average, a very large impact on economic activity—equivalent to a loss of about 15 percent in industrial production over a 30-day period following their implementation. Using novel data on fiscal and monetary policy measures used in response to the crisis, we find that these policy measures were effective in mitigating some of these economic costs. We also find that while workplace closures and stay-at-home orders are more effective in curbing infections, they are associated with the largest economic costs. Finally, while easing of containment measures has led to a pickup in economic activity, the effect has been lower (in absolute value) than that from the tightening of measures.

Series:

Working Paper No. 2020/158

Subject:

Central bank policy rate COVID-19 Economic and financial statistics Financial services Fiscal policy Fiscal stimulus Health Industrial production Production

Frequency:

regular