Abstract:
The paper documents an empirical model of the joint effects on health and the economy of the COVID-19 virus in Norway. The model is an extension of the econometric framework which has been used for real time forecasting of new cases and hospital beds during the pandemic. An important premise for modelling has been the extension of the daily measurement system to include daily indicators of economic activity. We build on existing methods for temporal disaggregation, and “dailylize” the monthly GDP data by the use of a daily Financial News Index. We distinguish between awareness effects and the effects of endogenous changes in containment policies. We find significant effects on the economy through both channels. We also find that the effects of containment policies were more negative in 2020 than later in the pandemic. A plausible explanation is that firms, households and the government learned how to adapt to the pandemic.