Lights out? COVID-19 containment policies and economic activity

Robert C M Beyer; Tarun Jain; Sonalika Sinha

doi:10.1016/j.asieco.2023.101589

Lights out? COVID-19 containment policies and economic activity

J Asian Econ. 2023 Apr:85:101589. doi: 10.1016/j.asieco.2023.101589. Epub 2023 Feb 15.

Authors

Robert C M Beyer¹, Tarun Jain², Sonalika Sinha³

Affiliations

¹ World Bank, India.
² Indian Institute of Management Ahmedabad, India.
³ Reserve Bank of India, India.

Abstract

This paper estimates how strongly COVID-19 containment policies have impacted aggregate economic activity. We use a difference-in-differences methodology to estimate how containment zones of different severity across India impacted district-level nighttime light intensity, as well as household income and consumption. From May to July 2020, nighttime light intensity was 9.1 % lower in districts with the most severe restrictions compared with districts with the least severe restrictions, which could imply between 5.8 % and 6.6 % lower GDP. Nighttime light intensity was only 1.6 % lower in districts with intermediate restrictions. The differences were largest in May during the graded lockdown, and tapered in June and July. Lower house-hold income and consumption corresponding to zone-wise restrictions corroborate these results. Stricter containment measures had larger impacts in districts with greater population density, older residents, and more services employment. The large magnitudes of the findings suggest that governments should carefully consider the economic costs of country-wide pandemic containment policies while weighing the trade-offs against public health benefits. Keywords: Containment policies, COVID-19, Nighttime lights, India.

Keywords: E21; H12; I18.