Working Paper: NBER ID: w27060
Authors: Casey B. Mulligan
Abstract: The “shutdown” economy of April 2020 is compared to a normally functioning economy both in terms of market and nonmarket activities. Three novel methods and data indicate that the shutdown puts market production 25-28 percent below normal in the short run. At an annual rate, the shutdown is costing $7 trillion, or about $15,000 per household per quarter. Employment already fell 28 million by early April 2020. These costs indicate, among other things, the value of innovation in both health and general business sectors that can accelerate the time when normal activity resumes.
Keywords: COVID-19; economic shutdown; medical innovation; GDP; health economics
JEL Codes: E01; I18; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in market production (L11) | Loss of $7 trillion (F65) |
| Medical innovations (O35) | Mitigation of economic losses (H84) |
| Economic policies (E64) | Income inequality (D31) |
| Economic shutdown due to COVID-19 (F69) | Reduction in market production (L11) |
| Number of workdays (J29) | Economic output (GDP) (E23) |
| Government labor classification during shutdowns (J45) | Economic output (E23) |
| Labor hours data (J30) | Change in working hours (J22) |