Economic Mobility Likely to Increase Significantly after Relaxation – but also Number of COVID-19 Cases
In Germany, measures to contain the coronavirus were relaxed in some areas at the beginning of March; in many places, for example, the restrictions on private and public gatherings were eased, and retail stores are increasingly able to receive customers again. The aim of these decisions is to allow for more economic mobility and personal contact between people. However, the frequency of contact is a major factor influencing the rate at which the coronavirus spreads, especially since the relaxations have so far not been accompanied by a systematic testing strategy; and vaccination progress has so far also fallen short of expectations. Estimates based on a model of the relationship between containment measures (Oxford COVID-19 Government Response Tracker, Stringency Index), economic mobility (Google Mobility Data), new corona infections, and deaths with data from 44 countries suggest that the recent relaxations increase economic mobility by ten percentage points and the number of new infections and deaths in Germany by 25%. Because both continued lockdown and relaxations have significant negative consequences, it is even more important to enable further relaxations through better testing and quarantine strategies and by increasing the pace of vaccination without putting people's health at risk.
18. March 2021
Page 2Relaxations and increasing corona cases
Page 3Economic policy implications
Page 4Endnotes All on one page
To contain the spread of coronavirus, many countries have implemented restrictions on mobility and public life. Examples of such measures include school and business closures, cancellation of major events, restrictions on freedom of assembly, closure of public transport, curfews, and restrictions on national and international travel. The overall intensity of these measures, as measured by the Oxford COVID-19 Government Response Tracker (Stringency Index), rose to a high level in Germany in the wake of the first wave of infection in spring 2020 (see figure 1). In the summer of 2020, some measures were withdrawn or relaxed. Since mid-October 2020, measures have been tightened again: Restaurants were closed in November; large parts of the retail sector and general education schools in mid-December. Mobility, which is also important for many economic activities, reflects the level of containment measures (see figure 2).
Empirical evidence demonstrates that, on the one hand, public life restrictions are likely to mitigate the number of new corona infections; however, ever further containment measures tend to have smaller and smaller effects on the number of new infections (Bendavid et al. 2021)1 and on the number of deaths. On the other hand, containment measures affect economic activity; the longer containment measures last and the more intensive they are, the higher the direct economic costs of containment policies. For example, lost sales can lead to corporate bankruptcies (Holtemöller and Muradoglu 2020)2. Thus, there is a certain trade-off between reducing deaths and serious disease progression and avoiding economic losses.3 However, this does not mean that it is not optimal from an economic perspective in the medium to long term to accept some level of income loss associated with containment measures (Holtemöller 2020)4. But it does mean that the various effects must be weighed against each other when deciding whether to take or withdraw containment measures.