Trading Off Consumption and COVID-19 Deaths

Abstract

We are grateful to Romans Pancs and Katelyn Ann Tynan for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w27340.ack NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Optimal Lockdown in a Commuting Network

“…Following Wang et al (2020) we set γ R consistent with a recovery time of 18 days and also show results assuming 10 days. Ferguson et al (2020) obtain an infection fatality ratio of 0.9%, which we use as benchmark, and we also show results using a lower bound of 0.3% across studies (Hall et al, 2020). Alamian et al (2019) estimate that 36% of cases infections are asymptomatic.…”

A Simple Planning Problem for COVID-19 Lockdown

“…In Figure 6, we explore the effect of increasing the value of statistical life to 30 times annual GDP per capita -which is in the upper end of the values consider by Hall, Jones, and Klenow (2020). 9 In this case, the lockdown starts in two weeks -a bit faster than the benchmark-, peaks in a month with about 60% of the population in lockdown, and decreases linearly and slowly, until is abandoned slightly more than six month after it stared.…”

“…Our choice of the benchmark value for χ = 0, and hence of the penalty deaths, is in line with Hall, Jones, and Klenow (2020). Lastly, we assume that even in a disaster scenario, economic sectors such as health, government, retail, utilities, and food manufacturing will continue.…”

“…We adopt a variation in the SIR epidemiology model reviewed and proposed by Atkeson (2020) andNeumeyer (2020) to analyze the optimal lockdown policy. Our aim is to contribute to the ongoing discussion on the optimal policy response to the COVID shock, see Barro, Ursua, and Weng (2020); Eichenbaum, Rebelo, and Trabandtz (2020) ;Hall, Jones, and Klenow (2020); Dewatripont et al (2020); Piguillem and Shi (2020); Jones, Philippon, and Venkateswaran (2020) and the contributions in the volume by Baldwin and Weder (2020).…”

Pandemic Lockdown: The Role of Government Commitment

“…In choosing the degree of lockdown, the government weighs two opposing forces, as in Gourinchas (2020) and Hall et al (2020). On one hand, it considers the future health benefits in terms of reduced mortality from inhibiting the disease spread, as captured by the marginal change in the continuation value −V (Γ (Ω 1 , , κ)).…”