Covid-19 supply-side fiscal policies to escape the health-vs-economy dilemma

Emanuele Colombo Azimonti (), Luca Portoghese () and Patrizio Tirelli
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Emanuele Colombo Azimonti: University of Pavia
Luca Portoghese: University of Pavia

No 208, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: We develop a model that allows for online retail trade and for endogenous Covid related health expenditures. The market equilibrium at best imperfectly internalises the infection risk from contact-intensive retail trade, and the anticipation of health costs has large contractionary effects. The Ramsey planner exploits a subsidy to online trade to limit lockdown policies. Relative to the market equilibrium, the optimal policy stimulates consumption and contains the surge in health expenditures, mitigating both the recession and the persistence of the Covid-19 shock.

JEL-codes: E62 H21 H30 H51 I18 (search for similar items in EconPapers)
Pages: 39
Date: 2022-07
New Economics Papers: this item is included in nep-hea, nep-pbe and nep-pub
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