Economic Implications of State-Wide COVID-19 Response Aggressiveness

This paper aims to evaluate how the aggressiveness of each state’s response to the Covid-19 pandemic affected their respective economies from Q2, 2020 through Q2, 2021. In our study, we utilize the scale developed by McCann (2021, April 6), which ranks the least aggressive state response to the most aggressive state response at three different points of the pandemic. Through this methodology, we test the impact of the aggressiveness of each state governments’ response with the resulting economic impact within that state. Namely, we examine how this level of response affected each state’s unemployment rate, gross domestic product growth, and taxable sales growth of 27 various industries. In our analysis, we find that there was a significantly negative impact between each states response aggression and unemployment rates, GDP growth, and taxable sales for a sizable percentage of the analyzed industries. These results appear to remain consistent when we both analyze the instant quarterly impact of the restrictions imposed on a state, and when we factor in a quarter lag for each state’s response