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We develop a novel empirical approach to identify the effectiveness of policies against a pandemic. The essence of our approach is the insight that epidemic dynamics are best tracked over stages, rather than over time. We use a normalization procedure that makes the pre-policy paths of the epidemic identical across regions. The procedure uncovers regional variation in the stage of the epidemic at the time of policy implementation. This variation delivers clean identification of the policy effect based on the epidemic path of a leading region that serves as a counterfactual for other regions. We apply our method to evaluate the effectiveness of the nationwide stay-home policy enacted in Spain against the Covid-19 pandemic. We find that the policy saved 15.9% of lives relative to the number of deaths that would have occurred had it not been for the policy intervention. Its effectiveness evolves with the epidemic and is larger when implemented at earlier stages.
The coronavirus has led to a human tragedy, but it need not end up in an economic catastrophe.
In Southern Europe there are signs of a silver lining: the growth rate of the total number of deaths attributed to the coronavirus has been decreasing for weeks in Italy and Spain.
While the effect of the connement measures aim at limiting the spread of the virus is at best uncertain, the economic and social costs of a prolonged lockdown are much less ambiguous and potentially huge. Importantly, these costs can be very unequally distributed.
We argue that it is therefore time to start thinking about how to gradually unlock these countries, and we make some suggestions along this line starting with large-scale testing and continuous re-testing as the most useful pre-condition.