Title: Lights Out? COVID-19 Containment Policies and Economic Activity
Discussant: Prachi Mishra

We conducted the second Consumer Pyramids Research Seminar on 20 November 2020 at 6.00 PM IST.

Event Summary

The authors presented results from their paper on the effect of the government containment policy in India as a result of COVID-19 pandemic. Focusing on the May lockdown, their study provides district level estimates of government intervention on aggregate economic activity.

For the purpose of the study, the authors exploited the graded unlock strategy employed during May 2020, and analyzed economic output as measured by nighttime light intensity. Additionally, they studied the impact of the graded unlock on household consumption and income, using CPHS’s high-frequency panel data for the same.

Using a DiD strategy, they compared districts with different levels of restrictions, across two time periods. Data showed that nighttime lights recovered by 8.9 percent less in Red zone districts, and 1.5 percent less in Orange zones compared to Green zones as the lockdown was being lifted. Both mobility and income were affected more in Orange and Red zones relative to Green. While income effects were substantial and persisted, consumption rebounded by June.

Prachi Mishra, serving as the discussant, highlighted the contribution that the paper made to the existing literature. She cautioned the authors on the possibility of measurement error in containment policies, and suggested methods for overcoming the issue. Discussing questions leading from their research, she indicated areas for them to explore. She suggested improvements to their econometric model and offered alternative outcome variables for consideration.

Following the discussion, the authors received comments and suggestions from the audience as well, which concluded the session.

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