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Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR Model

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  • Hornstein Andreas

    (1Federal Reserve Bank of Richmond, Richmond, USA)

Abstract

I incorporate quarantine, contact tracing, and random testing in the basic SEIR model of infectious disease diffusion. A version of the model that is calibrated to known characteristics of the spread of COVID-19 is used to estimate the transmission rate of COVID-19 in the United States in 2020. The transmission rate is then decomposed into a part that reflects observable changes in employment and social contacts, and a residual component that reflects disease properties and all other factors that affect the spread of the disease. I then construct counterfactuals for an alternative employment path that avoids the sharp employment decline in the second quarter of 2020, but also results in higher cumulative deaths due to a higher contact rate. For the simulations a modest permanent increase of quarantine effectiveness counteracts the increase in deaths, and the introduction of contact tracing and random testing further reduces deaths, although at a diminishing rate. Using a conservative assumption on the statistical value of life, the value of improved health outcomes from the alternative policies far outweighs the economic gains in terms of increased output and the potential fiscal costs of these policies.

Suggested Citation

  • Hornstein Andreas, 2022. "Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR Model," The B.E. Journal of Macroeconomics, De Gruyter, vol. 22(1), pages 53-88, January.
    • Handle: RePEc:bpj:bejmac:v:22:y:2022:i:1:p:53-88:n:3
    DOI: 10.1515/bejm-2020-0168
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    1. David Berger & Kyle Herkenhoff & Chengdai Huang & Simon Mongey, 2022. "Testing and Reopening in an SEIR Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 1-21, January.
    2. Facundo Piguillem & Liyan Shi, 2022. "Optimal Covid-19 Quarantine and Testing Policies," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2534-2562.
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