Disentangling COVID-19, Economic Mobility, and Containment Policy Shocks

We study the dynamic interaction between COVID-19, economic mobility, and containment policy. We use Bayesian panel struc-tural vector autoregressions with daily data for 44 countries, iden-tified through traditional and narrative sign restrictions. We find that incidence shocks and containment shocks have large and per-sistent effects on mobility, morbidity, and mortality that last for one to two months. These shocks are the main drivers of the pandemic, explaining between 20 and 60 percent of the average and histori-cal variability in mobility, cases, and deaths worldwide. The policy trade-off associated to nonpharmaceutical interventions is 1 pp less economic mobility per day for 8 percent fewer deaths after 3 months.