January 12, 2021
According to Limestone’s latest modeling, a more-intense early-year lockdown may be less costly for the Canadian economy in the long run.
Limestone’s STUDIO model, which provides rapid-response policy analysis to guide short-to-medium term policy response, is the basis of the economic projections behind the Canadian Shield proposal put forward by the COVID Strategic Choices Group.
According to the model, a mitigation strategy of on-again, off-again lockdown measures into 2021 will result in an average monthly deficit of 524,416 full time equivalent jobs and a $82,627 million GDP deficit for Ontario– numbers that will be more extreme if there is a delay in widespread access to a vaccine. Meanwhile, pursuing a strategy that pursues the goal of eliminating the virus using moderately restrictive lockdown measures for a longer period of time would result in an average deficit of 371,030 full time equivalent jobs and a $60,951 million GDP deficit for Ontario. This ‘Canadian Shield’ model was found to be the least costly policy response of the options considered.
Pursuing such a policy means shifting priority to maintain a downward trend in COVID cases in order to avoid additional waves of lockdowns later in the spring.
“Full economic activity does not immediately resume with the lifting of economic restrictions,” says Dr. Christopher Cotton, Director of Research at Limestone Analytics and Professor of Economics at Queen’s University. “This means that an intense lockdown that allows for full reopening afterward may result in fewer overall jobs lost and a lower decline in GDP than on-again, off-again lockdowns where new restrictions are required every few months before the economy has a chance to fully recover from the previous round of restrictions.”
Limestone’s model can be adapted to provide estimates of job and GDP loss under any set of epidemiological and policy scenarios at the federal, provincial or municipal level. For the Canadian Shield proposal, the model was used to provide economic estimates for the epidemiological and policy projections being considered by the COVID Strategic Choices Group.
Limestone releases a monthly policy brief on COVID-19 lockdown and its impact on economy:
The policy brief will be updated monthly with projections for more-specific scenarios regarding the spread of the disease and policy evolution over the coming months.
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