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COVID-19 Pandemic and Economic Scenarios For Ontario

Miguel Casares (), Paul Gomme () and Hashmat Khan ()
Additional contact information
Miguel Casares: Departamento de Economía, Universidad PÌ ublica de Navarra, https://www.unavarra.es/departamento-economia
Hashmat Khan: Department of Economics, Carleton University, https://carleton.ca/economics/people/khan-hashmat-u/

No 20-15, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We propose the merge of an epidemiological Susceptible-Infected-Recovered (SIR) model with a macroeconomic model based on the optimizing behavior of representative agents. In the integrated model, the virus contagion depends on the endogenously deter- mined number of daily interpersonal contacts of individuals. These contacts may occur during both economic activities (consumption, working) and social activities. The rational behavior of households to determine consumption and work hours are affected by the virus spread because of a ‘fear of contagion’ term in their utility function. Social con- tacts are also included in the utility function in this case providing a positive marginal satisfaction. Other key features of the model are (i) a time-varying contagion probability to capture variations in public health preventative actions, (ii) asymptomatic virus transmission, (iii) a quarantine index capturing the scale of testing and effectiveness of surveillance (e.g., tracing and tracking, the speed of the process), (iv) telework, and (v) business shutdowns in response to the evolution of the contagion curve. The model parameters are calibrated to Ontario data and we present quantitative analyses of a variety of pandemic and economic scenarios relevant for policy makers.

Pages: 34 pages
Date: 2020-08-31
New Economics Papers: this item is included in nep-upt
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Published: Carleton Economics Papers

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