Social distancing, lockdown measures good for post pandemic economic revival  

• Researchers examined data from the 1918 flu pandemic in the U.S, which was similar to that of today’s coronavirus.
• Cities that implemented more rapid and forceful non-pharmaceutical health interventions do not experience worse downturns, says study.

A new study has found that aggressive government measures such as social distancing and lockdowns to counter the spread of a pandemic helps in quick economic recovery.

The study titled “Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu” conducted by Sergio Correia, Stephan Luck, and Emil Verner examined data from the 1918 flu pandemic in the U.S, which was similar to that of today’s coronavirus, which has claimed thousands of lives and has disrupted economic activity globally.

The researchers analyzed historical economic data, mortality rates and banking statistics of 30 US states and 43 to 66 cities as they seek to understand the economic impacts of the pandemic and the public health responses to it.

The study finds that pandemic leads to a sharp and persistent fall in real economic activity. “We find negative effects on manufacturing activity, the stock of durable goods, and bank assets, which suggests that the pandemic depresses economic activity through both supply and demand-side effects.”

“Second, cities that implemented more rapid and forceful non-pharmaceutical health interventions do not experience worse downturns. In contrast, evidence on manufacturing activity and bank assets suggests that the economy performed better in areas with more aggressive NPIs after the pandemic,” the study added.

The study concludes that pandemics are highly disruptive for economic activity. “However, timely measures that can mitigate the severity of the pandemic can reduce the severity of the persistent economic downturn. That is, NPIs can reduce mortality while at the same time being economically beneficial.”