The Distributional Effects of COVID-19 and Optimal Mitigation Policies

Sewon Hur

No 400, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: This paper develops a quantitative heterogeneous agent–life cycle model with a fully integrated epidemiological model in which economic decisions affect the spread of COVID-19 and vice versa. The calibrated model is used to study the distributional consequences and effectiveness of mitigation policies such as a stay-at-home subsidy and a stay-at-home order. First, the stay-at-home subsidy is preferred because it reduces deaths by more and output by less, leading to a larger average welfare gain that benefits all individuals. Second, Pareto-improving mitigation policies can reduce deaths by nearly 45 percent without any corresponding reduction in output relative to no public mitigation. Finally, it is possible to simultaneously improve public health and economic outcomes, suggesting that debates regarding a supposed tradeoff between economic and health objectives may be misguided.

Keywords: pandemic; coronavirus; COVID-19; mitigation; tradeoffs (search for similar items in EconPapers)
JEL-codes: D62 E21 E32 E62 I14 I15 (search for similar items in EconPapers)
Pages: 56
Date: 2020-09-02, Revised 2022-05-12
New Economics Papers: this item is included in nep-dge, nep-hea and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: THE DISTRIBUTIONAL EFFECTS OF COVID‐19 AND OPTIMAL MITIGATION POLICIES (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:88689

DOI: 10.24149/gwp400r4

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