Political Partisanship, COVID-19 Lockdown Policies, and Inflation Dynamics: Evidence from U.S. Metropolitan Areas

Yixiao Jiang (), Kathryn D’Amato, Robert Winder and George Zestos
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Yixiao Jiang: Western New England University
Kathryn D’Amato: Christopher Newport University
Robert Winder: Christopher Newport University
George Zestos: Christopher Newport University

Atlantic Economic Journal, 2024, vol. 52, issue 2, No 3, 79-92

Abstract: Abstract Based on a dynamic panel data model, this paper estimates the impact of lockdown policies on inflation with U.S. metropolitan-level data from the Bureau of Labor Statistics. After controlling for the unit/time fixed effects and several aggregate demand/supply shifters, lockdown policies created a mild inflationary effect nationwide, though the individual effect was heterogeneous. This study novelly analyzes the political economy of coronavirus disease policy and the subsequent economic outcomes. In particular, the inflationary impact was most pronounced for Republican-governed states that switched votes from President Trump in 2016 to President (elect) Biden in 2020, suggesting price stability is a source of voting behavior. On the contrary, lockdown policies caused deflation in Democratic-governed states where unemployment rates and public compliance with lockdown measures were presumably higher. The results indicate that the economic consequences of public policies depend critically on the political partisanship of the region.

Keywords: COVID 19; Inflation; Lockdown policy; Political partisanship; C23; E31; E61 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11293-024-09804-0

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