Optimal COVID-19 Quarantine and Testing Policies

Facundo Piguillem and Liyan Shi

No 14613, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study quantitatively the optimality of quarantine and testing policies; and whether they are complements or substitutes. We extend the epidemiological SEIR model incorporating an information friction. Our main finding is that testing is a cost-efficient substitute for lockdowns, rendering them almost unnecessary. By identifying carriers, testing contains the spread of the virus without reducing output. Although the implementation requires widespread massive testing. As a byproduct, we show that two distinct optimal lockdown policy types arise: suppression, intended to eliminate the virus, and mitigation, concerned about flattening the curve. The choice between them is determined by a "hope for the cure" effect, arising due to either an expected vaccine or the belief that the virus can be eliminated. Conditional on the policy type, the intensity and duration are invariant to the welfare function's shape: they depend mostly on the virus dynamics.

Keywords: Covid-19; Optimal quarantine; Optimal testing; Welfare cost of quarantines (search for similar items in EconPapers)
JEL-codes: E1 E65 H12 I1 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (151)

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Journal Article: Optimal Covid-19 Quarantine and Testing Policies (2022)
Working Paper: Optimal COVID-19 Quarantine and Testing Policies (2020)
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