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International Monetary Fund. Research Dept.

identification strategy. Because China was among the first countries to impose lockdown restrictions, a visual analysis of its initial effects is less likely to be affected by confounding factors, and therefore more amenable to a simple illustration. The top two panels in Figure 1 show the distribution of travel times before the pandemic in our bilateral seaborne trade data set from China to Korea ( Figure 1 , panel 1) and from China to the US West Coast ( Figure 1 , panel 2). With most trips taking between one and three days, the lockdowns imposed by China on January 23

Mr. Francesco Caselli, Mr. Francesco Grigoli, Weicheng Lian, and Mr. Damiano Sandri
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.