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News shocks at the local level: Evidence from a conditional Covid-19 containment measure

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  • Savu, Alexandru

Abstract

To reduce the spread of Covid-19 whilst limiting the economic costs of containment policies, governments have introduced geographically-flexible conditional restrictions — measures targeting sub-national areas whose severity depends on the virus’s local incidence rate. I analyze whether conditional measures impact transmission rates via a news-shock effect — that is, by incentivizing indirect actions in anticipation of the policies being carried out. Exploiting a natural experiment from Romania in a regression-discontinuity framework, I provide early empirical evidence in this sense: I find that the Covid-19 incidence rate fell significantly in targeted constituencies following the announcement of a conditional containment measure, but prior to the policy being implemented. My results add to a broader literature on news-driven fluctuations, wherein expectations of future policies can impact immediate behaviors. I conclude by discussing an important avenue for future research.

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  • Savu, Alexandru, 2022. "News shocks at the local level: Evidence from a conditional Covid-19 containment measure," Economics Letters, Elsevier, vol. 214(C).
    • Handle: RePEc:eee:ecolet:v:214:y:2022:i:c:s0165176522000799
    DOI: 10.1016/j.econlet.2022.110416
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