Estimating the Real Shock to the Economy From Covid-19: The Example of Electricity Use in China

Abstract

Quantifying the shock to the economy from the COVID-19 pandemic is difficult. Although this shock is easily linked to financial markets as a sort of monetary shock, few studies have been done on its effect on the real economy. This study takes a particular economic perspective, focusing on electricity uses in various sectors of the economy. We propose a novel method for comparing electricity use in 2019Q1 and 2020Q1, based on which we derive the degree of the real shock to some important economic sectors from COVID-19. In our theoretical framework, demand for energy and its influencing factors are related to the total scale of the economy, i.e., the gross domestic product. Using suitable empirical methods, we obtain certain marginal effects and then calculate the corresponding ratio as the real shock from COVID-19. The ratio between these marginal effects reveals the need for a balance between stocks and the corresponding differences in the economy. In our cases, the electricity use in various economic sectors plays a role in both stocks and the differences. We find that, although manufacturing and consumption are affected, the services are more vulnerable to the shock from the COVID-19 pandemic. Our findings offer implications for policymakers.

Industry return lead-lag relationships between the US and other major countries

“…However, sudden shocks worldwide, such as the COVID-19 pandemic, have distorted most economic activities. For instance, in the case of China, Liu et al ( 2022 ) consider that demand for energy and its influencing factors are related to the total scale of the economy and conclude that although manufacturing and consumption were affected, services were more vulnerable to the shocks from the COVID-19 pandemic. COVID-19 also disconnects the relationship between fundamentals and stock market activity (Fromentin 2022 ) and heightens the level of uncertainty, rendering effective asset allocation and portfolio diversification part of the optimum choice for investors (Asafo-Adjei et al 2021 ).…”

Urban housing prices within a core urban agglomeration in China

“…Further, we can conduct more in-depth research and analysis with spatial econometric models. Now facing the shocks of COVID-19 (Wang and Liu 2022 ; Liu et al 2022 ), the development of the housing market in China become more diverse. Therefore, the method and basic results shown in this study are still useful in future studies.…”

Characteristics of household energy consumption in the shadow of the Russia-Ukraine war - a case study from Hungary

“…First, a significant number of analyses on the Characteristics of Household Energy Consumption in the Shadow of the Russia-Ukraine War -A Case Study from Hungary effects of COVID-19 have been published (e.g. [8], [9], [10]) since 2020. Due to the short time elapsed, there are far fewer articles analysing the impact of the 2021-2022 energy crisis and the specific policy measures taken to address it (e.g.…”