Assessing the Economic Effects of Lockdowns in Italy: A Dynamic Input-Output Approach

LEM Working Paper Series, No. 2021/3

50 Pages Posted: 4 Feb 2021

See all articles by Severin Reissl

Severin Reissl

Institute of Advanced Study (IUSS - Pavia)

Alessandro Caiani

University of Pavia - Faculty of Economics

Francesco Lamperti

Scuola Superiore Sant'Anna di Pisa - Institute of Economics and LEM; Fondazione Eni Enrico Mattei (FEEM)

Mattia Guerini

Scuola Superiore Sant'Anna di Pisa; OFCE - SciencesPo

Fabio Vanni

Observatoire Français des Conjonctures Economiques (OFCE)

Giorgio Fagiolo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Tommaso Ferraresi

Istituto Regionale Programmazione Economica Toscana (IRPET)

Leonardo Ghezzi

Istituto Regionale Programmazione Economica Toscana (IRPET)

Mauro Napoletano

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG); Observatoire Français des Conjonctures Economiques (OFCE); SKEMA Business School; Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Andrea Roventini

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM); Observatoire Français des Conjonctures Economiques (OFCE)

Date Written: February 2, 2021

Abstract

The unprecedented lockdown measures implemented by many countries in the wake of the COVID-19 pandemic have created a need for tools to assess their economic costs. For this purpose, we present a novel dynamic input-output modelling framework which we apply to an estimation of the economic impact of lockdowns in Italy. Lockdown measures are treated as shocks to available labor supply, being calibrated on regional and sectoral employment data coupled with the prescriptions of the prime ministerial decrees mandating the closure of specific industries. Using input-output tables for the Italian regions, we estimate the model on data from the first lockdown during spring 2020 and then simulate it to assess the regional and sectoral impacts. We find that, despite the simplicity of our framework, the model is able to reproduce the observed dynamics during the lockdown-induced downturn and subsequent recovery fairly closely for most sectors. This ability to match the empirical data is also confirmed by a small out-of-sample forecasting exercise. We subsequently also simulate the second set of ‘softer’ lockdown measures implemented during autumn and winter of 2020 in order to evaluate their impact and compare them to the first, ‘hard’ lockdown. Overall, we believe the simplicity and parsimony of our framework make it suitable for providing quick and reasonably accurate evaluations of the economic effects of different lockdown measures.

Keywords: Input-output, COVID-19, Lockdown, Italy

JEL Classification: C63, C67, D57, E17, I18, R15

Suggested Citation

Reissl, Severin and Caiani, Alessandro and Lamperti, Francesco and Guerini, Mattia and Vanni, Fabio and Fagiolo, Giorgio and Ferraresi, Tommaso and Ghezzi, Leonardo and Napoletano, Mauro and Roventini, Andrea, Assessing the Economic Effects of Lockdowns in Italy: A Dynamic Input-Output Approach (February 2, 2021). LEM Working Paper Series, No. 2021/3, Available at SSRN: https://ssrn.com/abstract=3778996 or http://dx.doi.org/10.2139/ssrn.3778996

Severin Reissl

Institute of Advanced Study (IUSS - Pavia) ( email )

Italy

Alessandro Caiani (Contact Author)

University of Pavia - Faculty of Economics ( email )

Corso Strada Nuova, 65
27100 Pavia
Italy

Francesco Lamperti

Scuola Superiore Sant'Anna di Pisa - Institute of Economics and LEM ( email )

Institute of Economics
Piazza Martiri della Liberta, n. 33
Pisa, Pisa 56127
Italy

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

Mattia Guerini

Scuola Superiore Sant'Anna di Pisa ( email )

Piazza Martiri della Liberta, n. 33
Pisa, 56127
Italy

OFCE - SciencesPo ( email )

69 Quai d'Orsay
Paris 75004
France

Fabio Vanni

Observatoire Français des Conjonctures Economiques (OFCE) ( email )

69 Quai d'Orsay
Paris 75004
France

Giorgio Fagiolo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta', 33-I-56127
Pisa
Italy

Tommaso Ferraresi

Istituto Regionale Programmazione Economica Toscana (IRPET) ( email )

Firenze, 50100
Italy

Leonardo Ghezzi

Istituto Regionale Programmazione Economica Toscana (IRPET) ( email )

Firenze, 50100
Italy

Mauro Napoletano

Université de Nice Sophia Antipolis - Groupe de Recherche en Droit, Economie et Gestion (GREDEG) ( email )

250, rue Albert Einstein
Valbonne, 06560
France

Observatoire Français des Conjonctures Economiques (OFCE) ( email )

60, rue Dostoïevski
Sophia-Antipolis Cedex, 06902
France

HOME PAGE: http://www.ofce.sciences-po.fr

SKEMA Business School ( email )

60 rue Dostoïevski
Sophia Antipolis, 06902
France

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

Andrea Roventini

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta', 33-I-56127
Pisa
Italy

Observatoire Français des Conjonctures Economiques (OFCE)

69 Quai d'Orsay
Paris 75004
France

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