NON-PHARMACEUTICAL INTERVENTIONS AND THEIR ECONOMIC EFFECTS DURING THE COVID-19 PANDEMIC

Abstract

This paper evaluates the relationship between economic activity and non-pharmaceutical interventions implemented during the COVID-19 pandemic for 29 countries for the period between March 2020 and November 2020. Using industrial production as a proxy for economic activity and employing a dynamic panel data methodology to deal with the possible endogeneity problem, the empirical results suggest that non-pharmaceutical interventions negatively affect economic activity. Furthermore, this paper also contributes to the literature by analyzing the link between economic support provided by governments and economic activity during the pandemic. The findings indicate that governments can stabilize the decline in economic activity stemmed from non-pharmaceutical interventions by increasing the amount of economic support to households.