What Happened after SARS in 2003? The Economic Impacts of a Pandemic

Abstract

This study quantifies the economic impacts of SARS on the four affected Asian economies (China, Hong Kong, Taiwan, and Singapore) and the most affected Chinese provinces/cities (Beijing, Guangdong, Hebei, and Shanxi) using the synthetic control method with macroeconomic and remote-sensing night-light data. For the four affected economies, we find only very short-term and weakly identifiable adverse impact on quarterly per-capita GDP of Hong Kong and Taiwan. We see that these economies grew at a very fast pace in the post-SARS period; though we do not believe that this rapid growth is related to SARS. We detect a more persistent decrease in per-capita night-time lights of 20–30% in the most affected Chinese regions, Beijing and Guangdong. This downturn appears to be robust to placebo tests and the implementation of the Augmented Synthetic Control method (ASCM). Overall, these finding suggests that the benign picture that emerges from the analysis of national-level data has to be re-considered somewhat. While national economies have indeed bounced back quickly and fully, more locally, economies have taken longer to recover.