Protecting Lives and Livelihoods with Early and Tight Lockdowns

Author/Editor:

Francesca G Caselli ; Francesco Grigoli ; Weicheng Lian ; Damiano Sandri

Publication Date:

November 8, 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:

Using high-frequency proxies for economic activity over a large sample of countries, we show that the economic crisis during the first seven months of the COVID-19 pandemic was only partly due to government lockdowns. Economic activity also contracted because of voluntary social distancing in response to higher infections. We also show that lockdowns can substantially reduce COVID-19 infections, especially if they are introduced early in a country's epidemic. Despite involving short-term economic costs, lockdowns may thus pave the way to a faster recovery by containing the spread of the virus and reducing voluntary social distancing. Finally, we document that lockdowns entail decreasing marginal economic costs but increasing marginal benefits in reducing infections. This suggests that tight short-lived lockdowns are preferable to mild prolonged measures.

Series:

Working Paper No. 20/234

Frequency:

regular

English

Publication Date:

November 8, 2020

ISBN/ISSN:

9781513560434/1018-5941

Stock No:

WPIEA2020234

Format:

Paper

Pages:

27

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