Do lockdown and testing help in curbing COVID-19 transmission?

This study investigates the effectiveness of lockdown and testing in curbing the transmission of Covid-19 infection. Using a combination of data from the European Centre for Disease Prevention, Roser et al. (2020) and Hale et al. (2020), we carried cross-country analysis covering 69 countries across the 5 continents. To take care of the fact that the number of Covid-19 cases strongly depend on its own lag values, we used two-step system GMM for the estimations. Unlike prior studies that measure lockdown in terms of a fixed intervention date, we relied on the stringency index from Hale et al. (2020) that accommodates for the gradual lockdown measures in different countries. We found that an exogenous lockdown significantly affects the number of confirmed cases after 7 days of its implementation and its lag effects are intact even after 21 days of its implementation. A one unit change in the lockdown index decreases the total number of confirmed cases by 0.19 percent. Testing has no significant effects for at least 14 days after its implementation. However, after 21 days of its implementation, its effects become significant with −0.03 to −0.05 elasticity value.