The economic impact of lockdowns: A theoretical assessment

Gabriele Camera and Alessandro Gioffré

Journal of Mathematical Economics, 2021, vol. 97, issue C

Abstract: The sudden appearance of the SARS-CoV-2 virus and the onset of the COVID-19 pandemic triggered extreme and open-ended “lockdowns” to manage the disease. Should these drastic interventions be the blueprint for future epidemics? We construct an analytical framework, based on the theory of random matching, which makes explicit how epidemics spread through economic activity. Imposing lockdowns by assumption not only prevents contagion and reduces healthcare costs, but also disrupts income-generation processes. We characterize how lockdowns impact the contagion process and social welfare. Numerical analysis suggests that protracted, open-ended lockdowns are generally suboptimal, bringing into question the policy responses seen in many countries.

Keywords: Decentralized markets; Random matching; Contagion; Nonpharmaceutical interventions (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:97:y:2021:i:c:s0304406821001154

DOI: 10.1016/j.jmateco.2021.102552

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