COVID-19 social distancing measures and economic growth: Distinguishing short- and long-term effects

•COVID-19 social distancing policies reduce economic growth in current quarter.•Social distancing policies increase economic growth in next quarter.•Medium-term recovery effect is three times higher than short-term adverse effect.•Adverse effects stronger (weaker) in democracies (higher trust in government). Social distancing policies have been criticized for their adverse effect on economies. However, we evidence that while they have a short-run adverse effect, they also have a long-run recovery effect on economic growth. Utilizing quarterly gross domestic product (GDP) growth rate data from OECD member states, we find that the medium-term recovery effect of stringent social distancing policies on economic growth is three times higher the short-term adverse effect. We additionally investigate social distancing measures with sub-components of GDP, as well as the conditioning roles of institutional factors.