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The possible macroeconomic impact on the UK of an influenza pandemic

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Author Info

  • Marcus R. Keogh-Brown

    (Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London, UK)

  • Simon Wren-Lewis

    (Department of Economics, University of Oxford, London, UK)

  • W. John Edmunds

    (Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London, UK)

  • Philippe Beutels

    (Department of Epidemiology and Social Medicine, University of Antwerp, Antwerpen, Belgium)

  • Richard D. Smith

    (Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London, UK)

Abstract

Little is known about the possible impact of an influenza pandemic on a nation's economy. We applied the UK macroeconomic model 'COMPACT' to epidemiological data on previous UK influenza pandemics, and extrapolated a sensitivity analysis to cover more extreme disease scenarios. Analysis suggests that the economic impact of a repeat of the 1957 or 1968 pandemics, allowing for school closures, would be short-lived, constituting a loss of 3.35 and 0.58% of GDP in the first pandemic quarter and year, respectively. A more severe scenario (with more than 1% of the population dying) could yield impacts of 21 and 4.5%, respectively. The economic shockwave would be gravest when absenteeism (through school closures) increases beyond a few weeks, creating policy repercussions for influenza pandemic planning as the most severe economic impact is due to policies to contain the pandemic rather than the pandemic itself. Accounting for changes in consumption patterns made in an attempt to avoid infection worsens the potential impact. Our mild disease scenario then shows first quarter|first year reductions in GDP of 9.5|2.5%, compared with our severe scenario reductions of 29.5|6%. These results clearly indicate the significance of behavioural change over disease parameters. Copyright © 2009 John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 19 (2010)
Issue (Month): 11 ()
Pages: 1345-1360

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Handle: RePEc:wly:hlthec:v:19:y:2010:i:11:p:1345-1360

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Kenneth F. Wallis & Jan P. A. M. Jacobs, 2005. "Comparing SVARs and SEMs: two models of the UK economy," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 209-228.
  2. Warwick McKibbin & Alexandra Sidorenko, 2006. "Global Macroeconomic Consequences of Pandemic Influenza," CAMA Working Papers 2006-26, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Keogh-Brown, Marcus Richard & Smith, Richard David, 2008. "The economic impact of SARS: How does the reality match the predictions?," Health Policy, Elsevier, vol. 88(1), pages 110-120, October.
  4. Darby, Julia & Ireland, Jonathan & Leith, Campbell & Wren-Lewis, Simon, 1998. "COMPACT: a rational expectations, intertemporal model of the United Kingdom economy," Economic Modelling, Elsevier, vol. 16(1), pages 1-52, January.
  5. A Garratt & K Lee & M Pesaran & Yongcheol Shin, 2004. "A long run structural macroeconometric model of the UK," ESE Discussion Papers 35, Edinburgh School of Economics, University of Edinburgh.
  6. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
  7. Smith, Richard D. & Yago, Milton & Millar, Michael & Coast, Jo, 2005. "Assessing the macroeconomic impact of a healthcare problem: The application of computable general equilibrium analysis to antimicrobial resistance," Journal of Health Economics, Elsevier, vol. 24(6), pages 1055-1075, November.
  8. Wren-Lewis, Simon, et al, 1996. "The Macroeconomic Effects of Fiscal Policy: Linking an Econometric Model with Theory," Economic Journal, Royal Economic Society, vol. 106(436), pages 543-59, May.
  9. Werner B.F. Brouwer & Marc A. Koopmanschap, 2005. "The Friction-Cost Method: Replacement for Nothing and Leisure for Free?," PharmacoEconomics, Springer Healthcare | Adis, vol. 23(2), pages 105-111.
  10. Jong-Wha Lee & Warwick J. McKibbin, 2004. "Globalization and Disease: The Case of SARS," Asian Economic Papers, MIT Press, vol. 3(1), pages 113-131.
  11. Lars Jonung & Werner Roeger, 2006. "The macroeconomic effects of a pandemic in Europe - A model-based assessment," European Economy - Economic Papers 251, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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Cited by:
  1. Fenichel, Eli P., 2013. "Economic considerations for social distancing and behavioral based policies during an epidemic," Journal of Health Economics, Elsevier, vol. 32(2), pages 440-451.
  2. George Verikios & James McCaw & Jodie McVernon & Anthony Harris, 2010. "H1N1 influenza in Australia and its macroeconomic effects," Centre of Policy Studies/IMPACT Centre Working Papers g-212, Victoria University, Centre of Policy Studies/IMPACT Centre.
  3. Karlsson, Martin & Nilsson, Therese & Pichler, Stefan, 2012. "What Doesn't Kill You Makes You Stronger? The Impact of the 1918 Spanish Flu Epidemic on Economic Performance in Sweden," Working Paper Series 911, Research Institute of Industrial Economics.

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