Impact of COVID-19 and Nationwide Lockdowns on Vegetable Prices: Evidence from Wholesale Markets in ChinaJEL codes

In this paper, we employ a combination of time regression discontinuity design method (T-RD) and the difference-in-difference method (DID) to identify and quantify the causal effects of the strict lockdown policy on vegetable prices using multiple-year daily price data from 151 wholesale markets of Chinese cabbage. We find that the lockdown policy caused a large and immediate surge in price and price dispersion of Chinese cabbage, though they fluctuated smoothly for the same period in normal years. The DID results further show that the price surge peaked in the fourth week of lockdown but gradually came down to the level of a normal year by week 11. However, the price rose again (though to a much smaller extent) in response to the resurgence of COVID-19 in a few provinces in early-mid April but quickly returned to the normal level in week 15 when the lockdown measures were largely removed. We also find that the supply chain disruption is the driving factor for the price hike. Policy implications are drawn.

Automated summary

This study combines the time regression discontinuity design method and the difference-in-difference method to identify the causal effects of lockdown policies on Chinese cabbage prices. The results show that the lockdown caused a rapid surge in prices, with supply chain disruptions being the main driving factor. Prices quickly returned to normal levels after the lifting of lockdown measures.