The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes

Arias, Jonas E.; Fernández-Villaverde, Jesús; Rubio-Ramirez, Juan F.; Shin, Minchul

doi:10.21799/frbp.wp.2022.18

Working Paper

The Causal Effects of Lockdown Policies on Health and Macroeconomic Outcomes

Abstract: We assess the causal impact of epidemic-induced lockdowns on health and macroeconomic outcomes and measure the trade-off between containing the spread of an epidemic and economic activity. To do so, we estimate an epidemiological model with time-varying parameters and use its output as information for estimating SVARs and LPs that quantify the causal effects of nonpharmaceutical policy interventions. We apply our approach to Belgian data for the COVID-19 epidemic during 2020. We find that additional government mandated mobility curtailments would have reduced deaths at a very small cost in terms of GDP

Keywords: Causality; Policy interventions; Epidemiological models; Bayesian estimation;

JEL Classification: C1; C5; I1; H87;

https://doi.org/10.21799/frbp.wp.2022.18