Epidemic responses under uncertainty

Michael Barnett, Greg Buchak and Constantine Yannelis
Additional contact information
Michael Barnett: a W. P. Carey School of Business, Arizona State University , Tempe , AZ 85287
Greg Buchak: b Stanford University Graduate School of Business , Stanford , CA 94305

Proceedings of the National Academy of Sciences, 2023, vol. 120, issue 2, e2208111120

Abstract:

We examine how policymakers react to a pandemic with uncertainty around key epidemiological and economic policy parameters by embedding a macroeconomic SIR model in a robust control framework. Uncertainty about disease virulence and severity leads to stricter and more persistent quarantines, while uncertainty about the economic costs of mitigation leads to less stringent quarantines. On net, an uncertainty-averse planner adopts stronger mitigation measures. Intuitively, the cost of underestimating the pandemic is out-of-control growth and permanent loss of life, while the cost of underestimating the economic consequences of quarantine is more transitory.

Keywords: COVID-19; ambiguity; model uncertainty; dynamic general equilibrium (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Epidemic Responses Under Uncertainty (2020)
Working Paper: Epidemic Responses Under Uncertainty (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:nas:journl:v:120:y:2023:p:e2208111120

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