Lockdowns need geographic coordination because of propagation of economic effects through supply chains

Governments require regional or national lockdowns in order to prevent the spread of COVID-19, which causes large economic stagnation in wide areas because the declines of the lockdowns diffuse to other regions through supply chains. This study examines how governments mitigate the economic losses when they are obliged to implement lockdowns, using supply-chain data for 1.6 million firms in Japan. We find that the coordinated, i.e., simultaneous, lockdowns have less GDP losses than the incoordinated lockdowns through the test of all combinations of two-region lockdowns. Furthermore, we test practical scenarios in which 47 regions are imposed lockdowns in three months and find that if nation-wide lockdowns are coordinated, the GDP losses are less than the uncoordinated lockdowns.