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Stay-at-home orders and second waves: a graphical exposition

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  • Kent A. Smetters

    (Wharton and NBER)

Abstract

Integrated epidemiological-economics models have recently appeared to study optimal government policy, especially stay-at-home orders (mass “quarantines”). But these models are challenging to interpret due to the lack of closed-form solutions. This note provides an intuitive and graphical explanation of optimal quarantine policy. To be optimal, a quarantine requires “the cavalry” (e.g., mass testing, strong therapeutics, or a vaccine) to arrive just in time, not too early or too late. The graphical explanation accommodates numerous extensions, including hospital constraints, sick worker, age differentiation, and learning. The effect of uncertainty about the arrival time of “the cavalry” is also discussed.

Suggested Citation

  • Kent A. Smetters, 2020. "Stay-at-home orders and second waves: a graphical exposition," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 45(2), pages 94-103, September.
    • Handle: RePEc:pal:genrir:v:45:y:2020:i:2:d:10.1057_s10713-020-00056-x
    DOI: 10.1057/s10713-020-00056-x
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    References listed on IDEAS

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    1. Martin S Eichenbaum & Sergio Rebelo & Mathias Trabandt, 2021. "The Macroeconomics of Epidemics [Economic activity and the spread of viral diseases: Evidence from high frequency data]," The Review of Financial Studies, Society for Financial Studies, vol. 34(11), pages 5149-5187.
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    Cited by:

    1. Alexander Muermann & Casey Rothschild, 2020. "Special issue “Covid-19: the economics of pandemic risks and insurance” of the Geneva Risk and Insurance Review," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 45(2), pages 75-79, September.

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    More about this item

    Keywords

    Virus; Epidemiology; Economics; Quarantine;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • I0 - Health, Education, and Welfare - - General

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