The Macroeconomics of Testing and Quarantining

Martin Eichenbaum, Sergio Rebelo and Mathias Trabandt

No 27104, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a SIR-based macroeconomic model to study the impact of testing/quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarantining, the main effect of social distancing and mask use on health outcomes is to delay, rather than reduce, epidemic-related deaths. Social distancing and mask use reduce the severity of the epidemic-related recession but prolong its duration. There is an important synergy between social distancing and mask use and testing/quarantining. Social distancing and mask use buy time for testing and quarantining to come to the rescue. The benefits of testing/quarantining are even larger when people can get reinfected, either because the virus mutates or immunity is temporary.

JEL-codes: E1 H0 I1 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-hea and nep-mac
Note: EFG EH
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Citations: View citations in EconPapers (40)

Published as Martin S. Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2022. "The Macroeconomics of Testing and Quarantining," Journal of Economic Dynamics and Control, .

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Journal Article: The macroeconomics of testing and quarantining (2022)
Working Paper: The Macroeconomics of Testing and Quarantining (2022)
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