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On the Optimal Lockdown During an Epidemic

Author

Listed:
  • Martin Gonzalez-Eiras
  • Dirk Niepelt

Abstract

We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy re- ects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently expe- rienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9:5 percent of annual GDP.

Suggested Citation

  • Martin Gonzalez-Eiras & Dirk Niepelt, 2020. "On the Optimal Lockdown During an Epidemic," Diskussionsschriften dp2008, Universitaet Bern, Departement Volkswirtschaft.
    • Handle: RePEc:ube:dpvwib:dp2008
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    References listed on IDEAS

    as
    1. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
    2. James H. Stock, 2020. "Data Gaps and the Policy Response to the Novel Coronavirus," NBER Working Papers 26902, National Bureau of Economic Research, Inc.
    3. Fernando E. Alvarez & David Argente & Francesco Lippi, 2020. "A Simple Planning Problem for COVID-19 Lockdown," NBER Working Papers 26981, National Bureau of Economic Research, Inc.
    4. repec:aei:rpaper:1008561701 is not listed on IDEAS
    5. Andrew Atkeson, 2020. "What Will be the Economic Impact of COVID-19 in the US? Rough Estimates of Disease Scenarios," Staff Report 595, Federal Reserve Bank of Minneapolis.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Epidemic; pandemic; lockdown; social distancing; production shortfall; health care system; Covid-19; SIR model; logistic model;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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