2021/03 | LEM Working Paper Series | ||||||||||||||||
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On the economic and health impact of the COVID-19 shock on Italian regions: A value chain approach |
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Tommaso Ferraresi, Leonardo Ghezzi, Fabio Vanni, Alessandro Caiani, Mattia Guerini, Francesco Lamperti, Severin Reissl, Giorgio Fagiolo, Mauro Napoletano and Andrea Roventini |
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Keywords | |||||||||||||||||
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COVID-19 lockdown; value chains; input-output models; contagion risk; remote working.
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JEL Classifications | |||||||||||||||||
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R15, R10
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Abstract | |||||||||||||||||
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In this work, we evaluate the exposure of Italian regions to the risk associated with
the spread of COVID-19 through a two-step value chain approach. First, we estimate
the degree of participation of Italian regions in a plurality of value chains linked to
consumption, investment and exports. We distinguish between value chains aimed
at satisfying essential needs and supply chains activated by needs characterized by
a lower level of necessity in line with the restriction measures implemented by the
Italian government. Second, we investigate the different levels of contagion risk
associated with each value chain and the possibility of reducing it through remote
working. An exercise on policy measures implemented by the Italian government
during Fall 2020 completes the paper. We find that regions are affected differently by
lockdown policies because of their high heterogeneity in the degree of embeddedness
within different value chains and because their sectoral contributions to each of them.
As a result, Italian regions are associated with very diverse potentials for mitigating
contagion risk via remote working practices. Finally, we find evidence that economic
and contagion risks positively correlate in non essential value chains, while they are
negatively associated in the production of medium-necessity and essential goods and
services. In turn, strong lockdowns induce substantially different trade-offs across
regions, depending on how regions participate to value chains.
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