Abstract
We analyze whether and to what extent strategies employed by governments to fight the COVID-19 pandemic made a difference for GDP growth developments in 2020. Based on the strength and speed with which governments imposed non-pharmaceutical interventions (NPIs) when confronted with waves of infections we distinguish between countries pursuing an elimination strategy and countries following a suppression / mitigation strategy. For a sample of 44 countries fixed effect panel regression results show that NPI changes conducted by elimination strategy countries had a less severe effect on GDP growth than NPI changes in suppression / mitigation strategy countries: strategy matters. However, this result is sensitive to the countries identified as "elimination countries" and to the sample composition. Moreover, we find that exogenous country characteristics drive the choice of strategy. At the same time our results show that countries successfully applying the elimination strategy achieved better health outcomes than their peers without having to accept lower growth.
Highlights
The COVID-19 pandemic has caused a dramatic slowdown of the global economy in 2020 [1, 2]
This paper provides evidence on the impact of COVID-19 strategies pursued by governments of 44 countries on 2020 quarterly GDP growth, i.e. whether from an economic perspective the calls for pursuing an elimination strategy have merit or whether most governments have been right in following a suppression / mitigation strategy in order to minimize output losses
This paper addresses the question whether the 2020 growth performance of countries pursuing a COVID-19 elimination strategy as defined by [11] was significantly different from the performance in countries running a suppression / mitigation strategy
Summary
The COVID-19 pandemic has caused a dramatic slowdown of the global economy in 2020 [1, 2]. Most countries follow a suppression / mitigation strategy after the first wave while only six out of 38 countries continue to follow an elimination strategy, namely China, South Korea and New Zealand with the largest increase in the stringency index at a 7-day incidence rate below 1, and Australia, Spain and Japan at an incidence level below 5.
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