Supply-chain simulations for shaping lockdown policies

To prevent the spread of COVID-19, many governments have imposed lockdowns. This practice has resulted in economic stagnation across broad areas because of the shock of the lockdown propagated to other regions through supply chains. Using supply-chain data for 1.6 million firms in Japan, this study examines how the economic effects of lockdowns in multiple regions interact with each other. Our major findings are twofold. First, when multiple regions coordinate the timing of their lockdowns, their economic losses are smaller than when they do so asynchronously. Second, the benefit of synchronous lockdown in multiple regions is larger when they are connected through a larger number of supply-chain links. Our results suggest a need for policy coordination across regions and countries when lockdowns are imposed.

Automated summary

To prevent the spread of COVID-19, many governments have imposed lockdowns, resulting in economic stagnation. This study examines the economic effects of lockdowns in multiple regions and finds that coordinating the timing of lockdowns leads to smaller economic losses. Furthermore, the benefits of synchronous lockdowns are greater when regions are connected through more supply-chain links. These findings highlight the importance of policy coordination across regions and countries during lockdowns.