Assessing the Economic Impact of Lockdowns in Italy: A Computational Input-Output Approach

LEM Working Paper Series – 2021/3

Assessing the Economic Impact of Lockdowns in Italy: A Computational Input-Output Approach

Severin Reissl, Alessandro Caiani, Francesco Lamperti, Mattia Guerini, Fabio Vanni, Giorgio Fagiolo, Tommaso Ferraresi, Leonardo Ghezzi, Mauro Napoletano and Andrea Roventini

We build a novel computational input-output model to estimate the economic impactof lockdowns in Italy. The key advantage of our framework is to integrate the regional and sectoral dimensions of economic production in a very parsimonious numerical simulation framework. Lockdowns are treated as shocks to available labor supply and theyare calibrated on regional and sectoral employment data coupled with the prescriptions of government decrees. We show that when estimated on data from the first “hard” lockdown, our model closely reproduces the observed economic dynamics during spring 2020. In addition, we show that the model delivers a good out-of-sample forecasting performance. We also analyze the effects of the second “mild” lockdown in fall of 2020 which delivered a much more moderate negative impact on production compared to both the spring 2020 lockdown and to a hypothetical second “hard” lockdown.