A Preliminary Estimation of the Economic Costs of Lockdown in Rio Grande do Sul

Abstract

This article seeks to estimate the initial economic costs of the measures adopted to mitigate the spread of Covid-19 in Rio Grande do Sul. To this goal, it uses a structural time series model estimated through Kalman Filter to obtain a counterfactual path of daily sales in the state after many municipals’ decrees and the state decree number 55.128 of March 19, 2020. The results show that the accumulated costs of the lockdown policy in terms of losses on sales in the formal sector of the economy would be around BRL 43,34 billion and in terms of tax collection the losses would be around BRL 1,56 billion in only 27 days. Although the article has the limitation of using only information from the formal sector of the economy, it concludes that the costs of these measures are relevant and grow exponentially. It also concludes that it would be necessary for these measures to be able to prevent at least 13.158 deaths caused by Covid-19 in the state of Rio Grande do Sul for their benefits to outweigh their costs.