Getting ready for the next pandemic: supply- side policies to escape the health-vs-economy dilemma

Luca Portoghese () and Patrizio Tirelli
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Luca Portoghese: University of Pavia

No 219, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: In our simple macroeconomic model, firms have the option of reallocating output between contact-intensive and online retail trade, where the former contributes to the persistence of the pandemic shock while the latter does not. All this paves the way for the analysis of optimal supply-side fiscal policies that must strike a balance between shock miti- gation (lockdown) and the conventional macroeconomic stabilisation objective (subsidy to the online retail sector). In fact, we observe a complementarity between the strength of the optimal subsidy that allows to stabilize consumption and the lockdown policy aimed at controlling the epidemic shock. This conclusion is strengthened if employment raises the persistence of the epidemic shock.

Keywords: Pandemic shock; lockdown; supply side policies; macroeconomic stabilisation; online retail trade (search for similar items in EconPapers)
JEL-codes: E62 H2 H3 H51 I18 (search for similar items in EconPapers)
Pages: 31
Date: 2024-04
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