Abstract

This study aims to examine the influence of environmental performance (PM2.5) on COVID-19 intensity . For this purpose, we employ the newly introduced Hidden Panel Cointegration test and Nonlinear Panel Autoregressive Distributed Lag model. Results indicate the asymmetric linkages between PM2.5 and COVID-19 intensity, as the positive shock in PM2.5 raises the COVID-19 intensity by 21%, whereas the negative shock in PM2.5 decreases COVID-19 intensity by 12% in long-run. On the contrary, the positive shock in stringency measures decreases COVID-19 intensity by 42.8%, while the negative shock in stringency policy increases COVID-19 intensity by 66.7%. These findings imply that higher pollution increases the COVID-19 severity while higher stringency measures slow down people's movement and reduce COVID-19 intensity. However, a sudden negative shock in lockdown increases people's interaction, leading to a higher spread of the virus. These results suggest that governments should adopt stringent action plans to contain the transmissibility of COVID-19.