Modeling optimal quarantines under infectious disease related mortality

Aditya Goenka, Lin Liu and Manh Hung Nguyen

No 20-1136, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper studies optimal quarantines (can also be interpreted as lockdowns or selfisolation) when there is an infectious disease with SIS dynamics and infections can cause disease related mortality in a dynamic general equilibrium neoclassical growth framework. We characterize the optimal decision and the steady states and how these change with changes in effectiveness of quarantine, productivity of working from home, contact rate of disease and rate of mortality from the disease. A standard utilitarian welfare function gives the counter-intuitive result that increasing mortality reduces quarantines but increases mortality and welfare while economic outcomes and infections are largely unaffected. With an extended welfare function incorporating welfare loss due to disease related mortality (or infections generally) however, quarantines increase, and the decreasing infections reduce mortality and increase economic outcomes. Thus, there is no optimal trade-off between health and economic outcomes. We also study sufficiency conditions and provide the first results in economic models with SIS dynamics with disease related mortality - a class of models which are non-convex and have endogenous discounting so that no existing results are applicable.

Keywords: Infectious diseases; Covid-19; SIS model; mortality; sufficiency conditions; economic growth; lockdown; quarantine; self-isolation. (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-dge and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Modeling optimal quarantines under infectious disease related mortality (2020)
Working Paper: Modeling optimal quarantines under infectious disease related mortality (2020)
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