COVID-19 Impact and Mitigation Policies: A Didactic Epidemiological-Macroeconomic Model Approach

John Ansah, Natan Epstein and Valeriu Nalban

No 2020/233, IMF Working Papers from International Monetary Fund

Abstract: We develop an integrated epidemiological-macroeconomic model to analyze the interplay between the COVID-19 outbreak and economic activity, as a tool for capacity building purposes. We illustrate a workhorse framework that combines a rich epidemiological model with an economic block to shed light on the tradeoffs between saving lives and preserving economic outcomes under various mitigation policies and scenarios calibrated for emerging market and developing economies. In our benchmark setup, we link the effective contact frequency and labor supply decisions to the current state of the disease progression, allowing for relevant behavioral responses that introduce multiple feedback channels. We showcase the effects of various “smart” mitigation measures, e.g. improved quarantine capacity or targeted labor market restrictions, to alleviate the tradeoffs between health-related outcomes and economic activity, including in response to a second infection wave. The discovery of treatment or vaccine, and the possibility of temporary immunity for the recovered individuals are also considered. The model is further extended to a multisector framework to analyze the sectoral allocation effects of the COVID-19 shock.

Keywords: Pandemic; Epidemiological model; Macroeconomics; Emerging market and developing economies; Mitigation policy; WP; infection risk; lockdown measure; infection rate; government-mandated lockdown; infection prevalence; viral load; infection curve; infection intensity; wave scenario; infection wave; virus transmission rate; latency period; COVID-19; Labor markets; Global (search for similar items in EconPapers)
Pages: 28
Date: 2020-11-08
New Economics Papers: this item is included in nep-mac
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