Policy responses to COVID-19 pandemic waves: Cross-region and cross-sector economic impact

This paper proposes a modelling approach to assess the cross-region and cross-sector economic impacts of the restrictions imposed by governments to contain the COVID-19 pandemic. The nationwide lockdown imposed in Italy during the first wave of the pandemic is used as a benchmark. However, the adopted approach allows an ex-ante assessment of alternative policy responses, in the event of successive pandemic waves, in order to rationalise the policy intervention and reach the best possible compromise between containing the risk of contagion and reducing economic losses. The used approach consists of a nonlinear programming model based on a multiregional Input-Output (I-O) table, which guarantees greater flexibility than traditional I-O analysis. It is applied to estimate both direct and indirect losses of GDP and employment produced by alternative policy responses represented by general and differentiated lock-downs. The evidence deriving from the Italian experience shows a sort of learning process through successive waves based on the introduction of increasingly flexible and tailored policy responses to the pandemic. (C) 2022 The Society for Policy Modeling. Published by Elsevier Inc. All rights reserved..

Automated summary

This paper proposes a modelling approach to assess the economic impacts of COVID-19 restrictions across regions and sectors. The approach allows for evaluation of alternative policy responses to future waves of the pandemic, in order to strike a balance between containing contagion risk and minimizing economic losses. The study highlights the importance of flexible and tailored policy interventions based on successive waves of the pandemic, using Italy's experience as evidence.