Assessing the economic effects of lockdowns in Italy: a dynamic Input-Output approach

The Institute of Economics will hold a webinar meeting as part of its Seminar Series on Tuesday, February 2, 2021: Alessandro Caiani from the Scuola Universitaria Superiore IUSS of Pavia will present the paper "Assessing the economic effects of lockdowns in Italy: a dynamic Input-Output approach".

Abstract:

The unprecedented lockdown measures implemented by many countries in the wake of the COVID-19 pandemic have created a need for tools to assess their economic costs. For this purpose, the authors present a novel dynamic input-output model and its application to an estimation the economic impact of lockdowns in Italy. Lockdown measures are treated as shocks to available labor supply, being calibrated on regional and sectoral employment data coupled with the prescriptions of the prime ministerial decrees mandating the closure of specific industries.Using input-output tables for the Italian regions, we estimate the model on data from the first lockdown which was implemented in spring 2020 and then simulate it to assess the regional and sectoral impacts. The authors find that, despite the simplicity of the proposed framework, the model is able to reproduce the observed dynamics during the lockdown-induced downturn and subsequent recovery fairly closely for most of the sectors included in the analysis. This ability to match the empirical data is also confirmed by a small out-of-sample forecasting exercise. The authors subsequently simulate the second set of "softer" lockdown measures implemented during autumn and winter of 2020 in order to evaluate their impact and compare them to the first, "hard" lockdown. Overall, the simplicity and parsimony of the framework make it suitable for providing quick and reasonably accurate evaluations of the economic effects of alternative lockdown measures.

All interested participants are welcome to join online at the following link. External participants need to contact the organisers via email to grant access to the seminar.