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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.
International Monetary Fund. Research Dept.

Abstract

The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.

Mr. Nicola Pierri and Mr. Yannick Timmer

Front Matter Page Contents 1 Introduction 2 Related Literature 3 Data Sources 4 Descriptive Patterns 5 Results 5.1 Mobility and Economic Outcomes 5.2 Technology, Mobility, and Unemployment 5.2. 1 Individual Level Data 5.3 Counterfactual 6 Conclusion References FIGURES 1: Unemployment and Mobility in the US 2: Unemployment and Lockdown Stringency in the US 3: Lockdown across States 4: Mobility and Lockdown in the US 5: Mobility around Lockdown Tightening 6: Mobility around Lockdown Loosening 7: Lockdown

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

Lockdown on Mobility Conditional on the Stage of the Pandemic 6 Asymmetric Impact of Lockdown Tightening and Loosening 7 Impact of Lockdowns and Voluntary Social Distancing on Job Postings 8 Job Postings by Sector around Stay-at-Home Orders 9 Impact of a Full Lockdown on COVID-19 Infections 10 The Importance of Speed and Timing of Lockdowns 11 Sequencing of Lockdown Measures 12 Nonlinear Effects of Lockdowns List of Tables A.1 Data Sources A.2 Country Coverage

International Monetary Fund. Research Dept.

mobility. For example, governments are more likely to impose lockdowns when health risks become more acute. At the same time, people tend to reduce mobility because they fear contracting the virus, independent of lockdowns. This may lead to a spurious negative correlation between lockdowns and mobility. To alleviate these endogeneity concerns, the regression framework controls for the number of COVID-19 cases and includes lags of the mobility indicator. In other words, the empirical analysis tries to measure the impact on mobility from a lockdown tightening at a given

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

display the results from the national and subnational regressions, respectively. We see that in both cases a full lockdown leads to a very significant decline in mobility. When using national level data, the impact reaches about 25 percent after a week and then mobility starts to resume gradually as the lockdown tightening dissipates. 8 The estimates based on subnational data corroborate the negative effect of lockdowns on mobility. The shape of the mobility response is remarkably similar to the one obtained with national data. The impact is modestly larger and more

Mr. Nicola Pierri and Mr. Yannick Timmer

[ Heathcote et al ., 2020 ]. We also investigate more broadly how the decline in mobility affected economic outcomes and COVID-19 infection rates in the US and how it links to lockdown measures. We show that mobility frontran the state-level lockdown tightenings and loosenings. Before lockdowns were implemented in states, mobility already declined strongly, suggesting that a large part of the mobility decline can be attributed to voluntary social distancing. On the reopening side, mobility already started to increase before states loosened restrictions. However, infection

Mr. Nicola Pierri and Mr. Yannick Timmer
We study the economic effects of information technology (IT) adoption during the COVID-19 pandemic. Using data on IT adoption covering almost three million establishments in the US, we find that technology adoption can partly shield the economy from the impact of the pandemic. In areas where firms adopted more IT the unemployment rate rose less in response to social distancing. Our estimates imply that if the pandemic had hit the world 5 years ago, the resulting unemployment rate would have been 2 percentage points higher during April and May 2020 (16% vs. 14%), due to the lower availability of IT. Local IT adop-tion mitigates the labor market consequences of the pandemic for all individuals, regardless of gender and race, except those with the lowest level of educational attainment.
International Monetary Fund

downward revisions to global growth during 2022—23, which reflect the materialization of downside risks highlighted in the April 2022 World Economic Outlook : a sharper slowdown in China due to extended lockdowns, tightening global financial conditions associated with expectations of steeper interest rate hikes by major central banks to ease inflation pressure, and spillovers from the war in Ukraine. With growth near 3 percent in 2022—23, a decline in global GDP or in global GDP per capita—sometimes associated with global recession—is not currently part of the baseline

Mr. Francesco Caselli, Mr. Francesco Grigoli, Mr. Damiano Sandri, and Mr. Antonio Spilimbergo

the stringency of lockdowns evolves over the local projection horizon. Panel A.1a shows that a lockdown tightening tends to gradually decline and dissipate after about two weeks. These estimated dynamics reflect the way in which Italy, Portugal, and Spain have adjusted their lockdown stringency during the sample of analysis. As illustrated in panel A.1b, countries have adjusted the stringency of lockdowns rather frequently. Figure A.1: Lockdown Stringency Dynamics Notes: In panel A.1a, the x-axis denotes the number of days, the line denotes the point