We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that peopleís decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic. The competitive equilibrium is not socially optimal because infected people do not fully internalize the e§ect of their economic decisions on the spread of the virus. In our benchmark scenario, the optimal containment policy increases the severity of the recession but saves roughly half a million lives in the U.S.
Fonte: The Macroeconomics of EpidemicsMartin S. Eichenbaum, Sergio Rebelo, and Mathias TrabandtNBER Working Paper No. 26882March 2020JEL No. E1,H0,I1
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