The Economic and Epidemiological Impact of COVID-19 and Government Policies: Part II

In Part 1 of this series we described the impact of COVID-19’s spread on economic activity and government policies.1 In contrast, in this essay we show how government policies impact the spread of COVID-19 and economic activity. In particular, we examine policies aimed at controlling the spread of the virus and economic support policies implemented to mitigate the economic cost of the pandemic. Both containment and economic policies were intensely debated up to the widespread availability of vaccinations. Health and containment policies were controversial because they were claimed to lower economic activity to prevent the spread of COVID-19, but their ability to curb the disease was not fully known. And evaluating the trade-off between health and the economy was difficult in real time. Likewise, people asked whether economic support policies were generous enough to address the economic cost of the pandemic or overly generous and too costly. In Famiglietti and Leibovici (2021), we use a statistical model to tease out how COVID-19’s spread, government policies, and economic activity affect each other. We do this by looking at cross-state variation in the intensity of, The Economic and Epidemiological Impact of COVID-19 and Government Policies: Part 2