Optimal lockdown in altruistic economies

Stefano Bosi, Carmen Camacho and David Desmarchelier

Journal of Mathematical Economics, 2021, vol. 93, issue C

Abstract: The recent COVID-19 crisis has revealed the urgent need to study the impact of an infectious disease on market economies and provide adequate policy recommendations. The present paper studies the optimal lockdown policy in a dynamic general equilibrium model where households are altruistic and they care about the share of infected individuals. The spread of the disease is modeled here using SIS dynamics, which implies that recovery does not confer immunity. To avoid non-convexity issues, we assume that the lockdown is constant in time. This strong assumption allows us to provide analytical solutions. We find that the zero lockdown is efficient when agents do not care about the share of infected, while a positive lockdown is recommended beyond a critical level of altruism. Moreover, the lockdown intensity increases in the degree of altruism. Our robust analytical results are illustrated by numerical simulations, which show, in particular, that the optimal lockdown never trespasses 60% and that eradication is not always optimal.

Keywords: Optimal lockdown; SIS model; Ramsey model (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304406821000264
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Optimal lockdown in altruistic economies (2021)
Working Paper: Optimal lockdown in altruistic economies (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:93:y:2021:i:c:s0304406821000264

DOI: 10.1016/j.jmateco.2021.102488

Access Statistics for this article

Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii

More articles in Journal of Mathematical Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().