COVID restrictions, federal assistance and small businesses

Notes

See the chapter in my dissertation here.

Abstract

This paper uses high-frequency data on electricity consumption to demonstrate the effect of COVID restrictions on business activity and the mitigating effects of federal support programs. Using hourly data from the population of commercial customers in a utility and a panel event study framework, we evaluate how COVID restrictions alter total electricity consumption, the time profile of when electricity is consumed, and the probability that an account shuts down. We find that COVID mandated business closures led to a 48 to 71 kwh reduction in daily consumption, corresponding to 13% to 20% drop compared to pre-pandemic use. COVID also led to firm exit, with account closures and their probability increasing over the duration of the pandemic. While all firms reduced electricity consumption on average, these reductions are significantly less pronounced for firms that received a federal loan or grant. This suggests that federal support programs meaningfully dampened the detrimental effects of COVID restrictions on small businesses.