Social distancing laws cause only small losses of economic activity during the COVID-19 pandemic in Scandinavia

Aug 07, 2020

The analysis exploits a natural experiment to disentangle the effects of the virus and the laws aiming to contain it: Denmark and Sweden were similarly exposed to the pandemic but only Denmark imposed significant restrictions on social and economic activities. The study  estimate that aggregate spending dropped by around 25% in Sweden and, as a result of the shutdown, by 4 additional percentage points in Denmark. This suggests that most of the economic contraction is caused by the virus itself and occurs regardless of social distancing laws.  Proceedings of the National Academy of Sciences of the United States of America


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