What are the Economic Effects of Pandemic Containment Policies? Evidence from Sweden

Author/Editor:

Jana Bricco ; Florian Misch ; Alexandra Solovyeva

Publication Date:

September 18, 2020

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

This paper examines the economic effects of policies to contain Covid-19, by extracting lessons from Sweden’s experience during the ‘Great Lockdown’. Sweden’s approach was less stringent and based more on social responsibility than legal obligations compared to European peers. First, we provide an account of Sweden’s strategy and the health outcomes. Second, drawing on a range of data sources and empirical findings, our analysis of the first Covid-19 wave indicates that a less stringent strategy can soften the economic impact initially. These benefits could be eroded subsequently, due to potentially higher infection rates and a prolonged pandemic, but in Sweden’s case, the evidence remains mixed in this regard, and it is premature to judge the outcome of Sweden’s containment strategy. In addition, the economic effects of the containment strategy also depend on social behavior, demographics and structural features of the economy, such as the degree of export orientation, reliance on global supply chains, and malleability to remote working.

Series:

Working Paper No. 20/191

Frequency:

regular

English

Publication Date:

September 18, 2020

ISBN/ISSN:

9781513556109/1018-5941

Stock No:

WPIEA2020191

Format:

Paper

Pages:

30

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