Shutting down schools and workplaces when a pandemic strikes doesn’t hurt the economy — and actually could get things back to normal faster when the threat tapers off, according to a new study by Federal Reserve researchers.
The closures, quarantines and restricted business hours — what the Fed researchers call “nonpharmaceutical interventions” — lessen economic harm as well as reduce mortality.
The study, which was not officially endorsed by the US central bank, looked at evidence from the 1918 Spanish flu epidemic and determined “cities that intervened earlier and more aggressively do not perform worse and, if anything, grow faster after the pandemic is over.”
The researchers found that manufacturing output fell an average of 18% in hard-hit areas. Those places also saw a high number of loan defaults for both businesses and households.
Reacting 10 days earlier to a pandemic in a given city increased manufacturing employment by about 5% after the crisis passed, the researchers said. Putting restrictions in place an extra 50 days increased manufacturing employment by 6.5% afterward.
The researchers pointed to anecdotal evidence from the COVID-19 outbreak to support their findings.
Countries such as Taiwan and Singapore not only limited infection growth but appear to have mitigated the worst economic disruptions of the pandemic.
“Well-calibrated early and forceful NPIs should therefore not be seen as having major economic costs in a pandemic,” the researchers wrote.
The study, published by the Social Science Research Network, came out Friday, the same day the US enacted a $2 trillion bailout for companies and individuals.
2020-03-28 18:08:17Z
https://nypost.com/2020/03/28/coronavirus-shutdown-wont-hurt-economy-in-long-run-fed-study-says/
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