Government Measures and Economic Activity during the COVID-19 Outbreak : Some Preliminary Short-Term Evidence from Europe

The coronavIrus Disease 19 (COVID-19) outbreak has resulted in a major worldwide economic depression. Governmental reactions to face the COVID-19 pandemic threat are varied and characterised by diverse intensity. Restrictive measure have been taken to control the pandemic, although the same actions have determined economic fallouts that need to be faced by additional measures of social welfare support. The question concerning the type and the intensity of the governmental actions is still an open issue in the public debate. The present contribution is aimed at offering evidence on the impact of anti-COVID government actions on the volume of trade. Using monthly Eurostat data on 29 European countries, it investigates the relationship between the turnover of volume of sales (the percentage change on previous period) and the adoption of governmental measures. Explanatory variables employed encompass the government response to COVID-19 pandemic as measured by the Oxford University team led by the Blavatnik School of Government, namely, a government response index, a stringency index, a containment and health index and an economic support index. Among control variables used, there is an indicator of consumer confidence. It has been estimated a generalised least squares model, controlling for heteroskedasticity across panels and autocorrelation. The results outlined a positive relationship between consumer confidence and the percentage change of the index of deflated turnover of retail sale of food, beverages and tobacco; a negative relation between restrictive governmental measures; a negative relation between consumer confidence and the percentage change of the index of deflated turnover of retail sale via mail order houses or Internet. Instead, it emerged a positive relation between governmental measures aimed at stringency and the percentage change on previous period of the index of deflated turnover of retail sale via internet. The positive impact on internet retail outlines the growing importance of this channel for trade