Assessing the Effects of Covid-19 Containment Measures on Manufacturing and Services Industries

Cem Ali Gokcen

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: This paper analyzes the short-term economic impacts of non-pharmaceutical interventions introduced in response to the Covid-19 pandemic on the manufacturing and services industries using cross-country data and assesses the role that fiscal and monetary stimulus deployed had played so far. To this end, the manufacturing and services Purchasing Managers Indices (PMI) are regressed seperately in a panel data setting on Oxford StringencyIndex, which is a measure of government containment measures, and proxies for fiscal and monetary policy responses. Possible impacts of the progression of pandemic are also controlled for. The instrumental variable approach and system generalized method of moments are used to address potential endogeneity issue. Our empirical results from the cross-country analysis suggest that manufacturing PMI can fall by 3 points should the stringency of containment measures rise to the average maximum reached in the spring. We also show that the services PMI is more vulnerable to an increase in the stringency of non-pharmaceutical interventions. Our findings confirm that these adverse consequences can be averted by fiscal and monetary policy responses, which suggest that accommodative fiscal and monetary policies need to remain in place especially in countries with significant tightening in containment measures.

Keywords: Pandemic; COVID-19; Lockdown; Non-pharmaceutical interventions; Economic impact; PMI (search for similar items in EconPapers)
JEL-codes: C23 E52 E58 E62 H12 I18 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... g+Paperss/2021/21-18 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2118

Access Statistics for this paper

More papers in Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by Sermet Pekin () and Ilker Cakar () and ().