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The Economic Impacts of COVID-19 and City Lockdown: Early Evidence from China

Jianxin Wu, Xiaoling Zhan, Hui Xu and Chunbo Ma

No 329094, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: China adopted the world’s most stringent lockdown interventions to contain the COVID-19 spread. Using macro- and micro-level data, this paper shows that the pandemic and lockdown both had negative and significant impacts on the economy. Gross regional product (GRP) fell by 9.5 and 0.3 percentage points in cities with and without lockdown, respectively, representing a dramatic recession from China’s average growth of 6.74% before the pandemic. The results indicate that lockdown explains 2.8 percentage points of the GDP loss. We document significant spill-over effects the pandemic but no such effects of lockdown. Reduced mobility, land supply, and entrepreneurship are significant mechanisms underpinning the impacts. Cities with higher share of secondary industry, higher traffic intensity, smaller population, lower urbanization, and lower fiscal capacity suffered more. However, these cities have recovered well and quickly closed the economic gap in the aftermath of the pandemic and city lockdown.

Keywords: Community/Rural/Urban Development; Health Economics and Policy; Public Economics (search for similar items in EconPapers)
Pages: 41
Date: 2022-10-31
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DOI: 10.22004/ag.econ.329094

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