Stringent regulatory policies for COVID-19 and economic rationality

ABSTRACT

In this paper, we present an investigation of the effectiveness of the G7 countries’ COVID-19 responses as assessed by the stringency index and provide insights for the future. By observing trends in people’s mobility, a factor affected by stringency, we can find some interesting features in the course of the pandemic. Specifically, as the period of infection control measures is prolonged, there are indications that the effectiveness of such policies may diminish unless they are consistent with economic rationality. Furthermore, even when considering only developed countries, the situation in Japan is found to be unique.

KEYWORDS:

• COVID-19
• economic rationality
• stringency
• mobility

JEL CLASSIFICATION:

• D80
• E70
• H12
• I12
• I18

Acknowledgments

This study was conducted as part of the “Capital Accumulation and Productivity Growth after the COVID-19 Crisis” project undertaken at the Research Institute of Economy, Trade and Industry (RIETI). The authors would like to thank the Editor-in-Chief (Mark P. Taylor) and the anonymous referee for helpful comments and suggestions. The authors also gratefully acknowledge the Japan Society for the Promotion of Science (JSPS KAKENHI: Grant Numbers JP21K01481 and JP21K01507) and the Japan Center for Economic Research for financial support. Any errors are our responsibility alone.

Disclosure statement

The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Availability of data and material

The data used this study can be provided upon reasonable request.

Code availability

The code used in this study can be provided upon reasonable request.

Author’s contributions

• Roles/Writing - original draft, Investigation, and Formal analysis: Kei Hosoya• Roles/Writing - original draft, Investigation, and Data curation: Hiroaki Masuhara

Notes

¹ In the case of voluntarily restraining behaviour in particular, the behavioural change is thought to be prompted by fear of unknown infectious diseases, including variants that appear one after another. Binder (2020) is a pioneering study that examines the impact of fear on the macroeconomy.

² Google’s COVID-19 Community Mobility Report data (2020 and 2021).

³ The Oxford COVID-19 Government Response Tracker (OxCGRT) for the stringency index is collected by the Our World in Data team. https://github.com/owid/covid-19-data/tree/master/public/data.

⁴ The trends in the number of new positive PCR tests per 100,000 population (daily average of the increase in the number of new positive tests per week) in the G7 countries from 17 February 2020 to 30 November 2021 are used. The number of positive PCR tests was originally obtained from the COVID-19 Data Repository managed by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University.

⁵ Although difficult to identify, a relaxation of behaviour in response to vaccination progress can be observed in each figure.

Additional information

Funding

This work was financially supported by JSPS KAKENHI Grant Numbers JP21K01481 and JP21K01507 and by the Japan Center for Economic Research.