Abstract
This study quantifies the economic effect of a possible lockdown of Tokyo to prevent the spread of COVID-19. The negative effect of such a lockdown may propagate to other regions through supply chains because of supply and demand shortages. Applying an agent-based model to the actual supply chains of nearly 1.6 million firms in Japan, we simulate what would happen to production activities outside Tokyo if production activities that are not essential to citizens' survival in Tokyo were shut down for a certain period. We find that if Tokyo were locked down for a month, the indirect effect on other regions would be twice as large as the direct effect on Tokyo, leading to a total production loss of 27 trillion yen in Japan or 5.2% of the country's annual GDP. Although the production that would be shut down in Tokyo accounts for 21% of the total production in Japan, the lockdown would result in an 86% reduction of the daily production in Japan after one month.
Highlights
COVID-19, a novel coronavirus disease, has been spreading worldwide
The third column shows the production loss outside Tokyo, which is the propagation effect through supply chains
The total loss is the total gap between the pre-lockdown daily production and the current daily production
Summary
COVID-19, a novel coronavirus disease, has been spreading worldwide. To prevent the spread of COVID-19, most countries have implemented unprecedentedly stringent restrictions, such as a shutdown of national borders, limits on public gatherings, and closures of schools, shops, and restaurants. Wuhan, the epicenter of the novel coronavirus, was locked down from January 23 to March 27, 2020, including the closure of all public transport and all companies not essential to citizens’ survival, including manufacturing plants, for most of the period (Reuters, March 11, 2020). Because Wuhan, known as one of China’s “Detroits”, is a center of the automobile industry and supplies parts and components of automobiles to domestic and foreign plants, the effect of the lockdown propagated to other regions of China and other countries
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