The Macroeconomics of Testing and Quarantining

Martin Eichenbaum, Rebelo, Sérgio and Mathias Trabandt

No 14688, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a SIR-based macroeconomic model to study the impact of testing/quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarantining, the main effect of social distancing and mask use on health outcomes is to delay, rather than reduce, epidemic-related deaths. Social distancing and mask use reduce the severity of the epidemic-related recession but prolong its duration. There is an important synergy between social distancing and mask use and testing/quarantining. Social distancing and mask use buy time for testing and quarantining to come to the rescue. The benefits of testing/quarantining are even larger when people can get reinfected, either because the virus mutates or immunity is temporary.

Keywords: Epidemic; Covid-19; Recessions; Testing; Containment; Quarantine (search for similar items in EconPapers)
JEL-codes: E1 H0 I1 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-hea, nep-mac and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

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Related works:
Journal Article: The macroeconomics of testing and quarantining (2022)
Working Paper: The Macroeconomics of Testing and Quarantining (2020)
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