A Model of Crisis Management

Fei Li and Jidong Zhou ()
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Fei Li: Department of Economics VU Amsterdam
Jidong Zhou: Cowles Foundation, Yale University, https://som.yale.edu/faculty/jidong-zhou

No 2266R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We propose a model of how multiple societies respond to a common crisis. A government faces a "damned-either-way" policy-making dilemma: aggressive intervention contains the crisis, but the resulting good outcome makes people skeptical about the costly response; light intervention worsens the crisis and causes the government to be faulted for not doing enough. When multiple societies encounter the crisis sequentially, due to this policymaking dilemma, late societies may underperform despite having more information, while early societies can benefit from a dynamic counterfactual effect.

Keywords: Crisis Management; Counterfactual Effect; Political Accountability; Public Policy; Pandemic (search for similar items in EconPapers)
JEL-codes: D82 D83 F50 H12 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2020-12, Revised 2022-04
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