LOCKDOWN SLOWDOWNS: JUST COVID-19 OR THE ECONOMY TOO?

Abstract

At the onset of the Covid-19 pandemic, when lockdowns started becoming the norm, economic experts and average citizens alike forecasted that they would bring huge, long-lasting, negative impacts to the economy. Two years later, with the benefit of hindsight, did this turn out to be true? This thesis uses fixed effects analysis to examine the epidemiological benefits and economic costs of containment and closure policies to find out if the lockdowns were worth it. Results show that the epidemiological benefits of lockdowns are large: they are estimated to have prevented 50 million infections and almost one million deaths in the United States in 2020 and 2021. At the same time, contrary to initial speculations, lockdowns were found to have no significant long-term effects and minimal short-term impacts on the economy. The results from my main analysis allow me to rule out per capita GDP declines larger than 1.89%.