Mobility and economic activity around the world during the Covid-19 crisis

This paper traces the relationship between quarterly estimates of economic activity and people’s mobility during the Covid-19 crisis in a sample of 53 economies. Over time, the estimates of elasticity of value added with respect to mobility have been declining, to below 0.2 at the start of 2021, attesting to the gradual adjustment of global economic activity to social distancing. Yet this adjustment appears to be modest, with economic recovery driven primarily by greater mobility. The study highlights the limit to the extent to which economic costs of restricted movement of people can be reduced, with implications for public policy. The estimated relationships can also be effectively applied to economic forecasting during periods of reduced mobility.