Do Economic Effects of the Anti-COVID-19 Lockdowns in Different Regions Interact through Supply Chains?

Hiroyasu Inoue, Yohsuke Murase and Yasuyuki Todo

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: To prevent the spread of COVID-19, many cities, states, and countries went into lockdown, restricting economic activities in non-essential sectors. Such lockdowns have substantially shrunk production in most countries. This study examines how the economic effects of lockdowns in different regions interact through supply chains, a network of firms for production, simulating an agent-based model of production on supply-chain data for 1.6 million firms in Japan. We further investigate how the complex network structure affects the interactions of lockdowns, emphasizing the role of upstreamness and loops by decomposing supply-chain flows into potential and circular flow components. We find that a region's upstreamness, intensity of loops, and supplier substitutability in supply chains with other regions largely determine the economic effect of the lockdown in the region. In particular, when a region lifts its lockdown, its economic recovery substantially varies depending on whether it lifts lockdown alone or together with another region closely linked through supply chains. These results propose the need for inter-regional policy coordination to reduce the economic loss from lockdowns.

Pages: 40 pages
Date: 2021-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/21e001.pdf (application/pdf)

Related works:
Journal Article: Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains? (2021)
Working Paper: Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains? (2021)
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:eti:dpaper:21001

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().