Role of institutional, cultural and economic factors in the effectiveness of lockdown measures.

OBJECTIVE: This study considered the role of institutional, cultural and economic factors in the effectivemess of lockdown measures during the coronavirus pandemic. Earlier studies focusing on cross-sectional data found an association between low case numbers and a higher level of cultural tightness. Meanwhile, institutional strength and income levels revealed a puzzling negative relationship with the number of cases and deaths. METHODS: Data available at the end of September 2021 were used to analyse the dynamic impact of these factors on the effectiveness of lockdowns. The cross-sectional dimension of country-level data was combined with the time-series dimension of pandemic-related measures, using econometric techniques dealing with panel data. FINDINGS: Greater stringency of lockdown measures was associated with fewer cases. Institutional strength enhanced this negative relationship. Countries with well-defined and established laws performed better for a given set of lockdown measures compared with countries with weaker institutional structures. Cultural tightness reduced the effectiveness of lockdowns, in contrast to previous findings at cross-sectional level. CONCLUSION: Institutional strength plays a greater role than cultural and economic factors in enhancing the performance of lockdowns. These results underline the importance of strengthening institutions for pandemic control.

The Economic Case for Global Vaccinations: An Epidemiological Model with International Production Networks

COVID-19 pandemic had a devastating effect on both lives and livelihoods in 2020. The arrival of effective vaccines can be a major game changer. However, vaccines are in short supply as of early 2021 and most of them are reserved for the advanced economies. We show that the global GDP loss of not inoculating all the countries, relative to a counterfactual of global vaccinations, can be higher than the cost of manufacturing and distributing vaccines globally. We use an economic-epidemiological framework that combines a SIR model with international production and trade networks. Based on this framework, we estimate the costs for 65 countries and 35 sectors. Our estimates suggest that up to 49 percent of the global economic costs of the pandemic in 2021 are borne by the advanced economies even if they achieve universal vaccination in their own countries.

COVID-19 and Emerging Markets: A SIR Model, Demand Shocks and Capital Flows

We quantify the macroeconomic effects of COVID-19 for a small open economy in the absence of vaccinations. We use a framework that combines a multi-sector SIR model with data on international and inter-sectoral trade to estimate the effects of a joint collapse in domestic and foreign demand. We calibrate our framework to Turkey and estimate the COVID-19 related output losses for each sector. Domestic infection rates feed directly into sectoral demand shocks, where sectoral supply is affected both from sick workers and lockdowns. Sectoral demand shocks additionally capture foreign infection rates through foreign demand. We use real-time credit card purchases to pin down the magnitude of these domestic and foreign demand shocks. Our results show that the optimal policy, which yields the lowest economic cost and saves the maximum number of lives, can be achieved under an early and globally coordinated full lockdown of 39 days, amounting to a loss of 5.8 percent of GDP in the small open economy. To illustrate the importance of foreign demand, we compare the economic costs under globally coordinated vs. uncoordinated lockdown scenarios and incorporate the role of fiscal stimulus packages. Our findings illustrate that the economic drag in the rest of the world due to ineffective lockdown measures increases the economic toll in the small open economy by up to 2 percent of GDP. Meanwhile the stimulus packages abroad, by increasing foreign demand for small open economy’s goods, reduce costs by 0.5 percentage points. We further show that the lack of a similar large fiscal package in the small open economy can be remedied by capital inflows into sectors with large losses.