Optimal Epidemic Control

Dirk Niepelt Mart n Gonzales-Eiras

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: We develop a exible single-state model to represent tradeoffs between infections and activity during the early phase of an epidemic. We prove that optimal policy is continuous in the state but discontinuous in the deterministic arrival date of a cure; optimal lockdowns are followed by stimulus policies; and re-infection risk renders laissez faire ineffcient even in steady state. Calibrated to the COVID-19 pandemic the model prescribes initial activity reductions of 38 percent. Stimulus policies account for a third of the welfare gains of intervention. Robustness along many dimensions contrasts with sensitivity of the policy prescriptions with respect to the intertemporal elasticity of substitution, activity-infections nexus, and re-infection risk.

Keywords: Epidemic; lockdown; stimulus; logistic model; optimal control; COVID-19 (search for similar items in EconPapers)
JEL-codes: D62 I18 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-dge and nep-hea
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