A Predator-Prey Model of Unemployment and W-shaped Recession in the COVID-19 Pandemic

Maria Cristina Barbieri Góes () and Ettore Gallo
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Maria Cristina Barbieri Góes: Department of Economics, Università degli Studi Roma Tre

No 2006, Working Papers from New School for Social Research, Department of Economics

Abstract: The paper presents a predator-prey model which captures the interactions between unemployment rate and COVID-19 infection rate. The model shows that lockdown measures can effectively reduce the infection rate, but at the cost of higher unemployment rate. The solution of the system makes the case for an endemic equilibrium of COVID-19 infections, hence producing waves in the unemployment rate in the absence of widespread immunity and/or vaccination. Furthermore, we simulate the model, calibrating it for the US. The simulation shows the dramatic effects on unemployment and on overall economic activity produced by potential recurrent waves of COVID-19, leading to a series of W-shaped recessions that - in absence of adequate policy response - jeopardize the coming back to the normal trend in the medium run.

Keywords: COVID-19; unemployment rate; jobless recovery; W-shaped recession (search for similar items in EconPapers)
JEL-codes: E24 E60 H51 I18 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2020-05
New Economics Papers: this item is included in nep-cmp, nep-hea, nep-mac and nep-ore
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Citations: View citations in EconPapers (1)

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