The real economic costs of COVID-19: Insights from electricity consumption data in Hunan Province, China

Hongshan Ai; Tenglong Zhong; Zhengqing Zhou

doi:10.1016/j.eneco.2021.105747

The real economic costs of COVID-19: Insights from electricity consumption data in Hunan Province, China

Energy Econ. 2022 Jan:105:105747. doi: 10.1016/j.eneco.2021.105747. Epub 2021 Dec 1.

Authors

Hongshan Ai^{1

2}, Tenglong Zhong³, Zhengqing Zhou¹

Affiliations

¹ School of Economics and Trade, Hunan University, Changsha 410081, Hunan, China.
² Hunan Key Laboratory of Energy Internet Supply-demand and Operation, Changsha 410004, China.
³ School of International Trade and Economics, Central University of Finance and Economics, Beijing 102206, China.

Abstract

The COVID-19 pandemic has caused extreme economic fluctuations. However, the magnitude of the economic cost of this extreme event remains challenging to quantify. The impact of the COVID-19 pandemic on the economy is estimated through firm-level electricity consumption data from Hunan province, China. Specifically, a difference-in-differences (DID) model was employed to estimate the real economic costs. The results indicate that electricity consumption in Hunan Province dropped by 27.8% during the early stage of the COVID-19 pandemic. Manufacturing and the transportation industry suffered the most severe declines. Electricity consumption began to recover after the virus was controlled. We suggest that government departments should take full measures to prevent and control COVID-19 outbreaks and associated economic impacts, in conjunction with preparing for economic recovery, deploying targeted measures to support different industries in response to the heterogeneity COVID-19 pandemic impacts. The COVID-19 has changed people's living habits and brought a new direction, the Internet industry, of economic growth. Hunan Province needs to accelerate the digital empowerment of traditional industries, develop the Internet, 5G technology, and new digital infrastructure to offset the negative impact of the COVID-19 pandemic. Electricity consumption is an applicable index in estimate the real economic cost of extreme events.

Keywords: COVID-19; Chinese New Year, (CNY); Difference-in-differences; Electricity consumption; National Bureau of Statistics of the People's Republic of China, (NBS); National Health Commission of the People's Republic of China, (NHC); The real economic cost; difference-in-differences, (DID); gross domestic product, (GDP).