The Economic Costs and Health Impacts of Ending Lockdowns Prematurely : Evidence from Colombia

This study examines the causal effect of removing lockdown policies on new COVID-19 cases and deaths in Colombia, where abrupt ends to lockdowns were induced by sales tax holidays. Due to endogeneity issues, the causal effect of removing lockdowns has been challenging to measure. Using an innovative identification strategy, the study takes advantage of the exogenous variation in population mobility generated by these holidays and price inducements. By analyzing data from the Colombian Ministry of Health and Google Mobility, the study shows that removing lockdowns led to increased mobility, cases, deaths, and economic loss before vaccination, suggesting that ending lockdowns prematurely can have negative economic effects. However, the economic gains of removing the lockdown were higher than the health cost after the availability of vaccines. The findings can inform policymakers of the tradeoff between the potential consequences of ending lockdowns early and the importance of preparedness for future pandemics