Lockdown shocks ripple through economy, challenging traditional production models.
The article explores how the Covid-19 lockdown affected the economy by studying how supply and demand shocks spread across different industries. The researchers created a model based on input-output relationships and found that standard production functions were not enough to capture the impact of the pandemic. By analyzing which inputs were crucial for production in each industry, they were able to predict the economic effects of the lockdown in the UK accurately. The model performed well in predicting overall and sector-specific dynamics. They also discovered that traditional metrics for predicting shock impacts were not very helpful.