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Dealing with Covid-19: understanding the policy choices

Author

Listed:
  • Frederic Boissay
  • Daniel Rees
  • Phurichai Rungcharoenkitkul

Abstract

Containment policies save lives but restrict economic activity. Standard approaches to accounting for the value of human lives lend support to these policies despite their high short-term economic costs. Integrated epidemic-macroeconomic models provide a coherent framework for quantifying the costs and benefits of containment policies. Part of the benefit comes from limiting externalities that would otherwise arise if social distancing were purely voluntary. Standard epidemiological and economic parameters suggest that several months of strict containment policies that lead to as much as a 30% decline in GDP for the period of the lockdown could be preferable to alternatives with more casualties and a less severe recession.

Suggested Citation

  • Frederic Boissay & Daniel Rees & Phurichai Rungcharoenkitkul, 2020. "Dealing with Covid-19: understanding the policy choices," BIS Bulletins 19, Bank for International Settlements.
    • Handle: RePEc:bis:bisblt:19
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    References listed on IDEAS

    as
    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.
    2. Fernández-Villaverde, Jesús & Jones, Charles I., 2022. "Estimating and simulating a SIRD Model of COVID-19 for many countries, states, and cities," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    3. Daniel Sullivan & Till von Wachter, 2009. "Job Displacement and Mortality: An Analysis Using Administrative Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1265-1306.
    4. Veronica Guerrieri & Guido Lorenzoni & Ludwig Straub & Iván Werning, 2022. "Macroeconomic Implications of COVID-19: Can Negative Supply Shocks Cause Demand Shortages?," American Economic Review, American Economic Association, vol. 112(5), pages 1437-1474, May.
    5. Frederic Boissay & Phurichai Rungcharoenkitkul, 2020. "Macroeconomic effects of Covid-19: an early review," BIS Bulletins 7, Bank for International Settlements.
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    Citations

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    Cited by:

    1. bahri, muhamad, 2020. "The impacts of covid-19 on Indonesian poverty and unemployment," SocArXiv mz849, Center for Open Science.
    2. Eric Alexander Sugandi, 2022. "Indonesia’s Financial Markets and Monetary Policy Dynamics Amid the COVID-19 Pandemic," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(3), pages 411-447, September.
    3. Hinterlang, Natascha & Moyen, Stephane & Röhe, Oke & Stähler, Nikolai, 2023. "Gauging the effects of the German COVID-19 fiscal stimulus package," European Economic Review, Elsevier, vol. 154(C).
    4. Jan Krzysztof Solarz & Krzysztof Waliszewski, 2020. "Holistic Framework for COVID-19 Pandemic as Systemic Risk," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 340-351.
    5. Phurichai Rungcharoenkitkul, 2021. "Macroeconomic effects of COVID‐19: A mid‐term review," Pacific Economic Review, Wiley Blackwell, vol. 26(4), pages 439-458, October.
    6. Grażyna Szustak & Witold Gradoń & Łukasz Szewczyk, 2021. "Household Financial Situation during the COVID-19 Pandemic with Particular Emphasis on Savings—An Evidence from Poland Compared to Other CEE States," Risks, MDPI, vol. 9(9), pages 1-15, September.
    7. Phurichai Rungcharoenkitkul, 2021. "Macroeconomic consequences of pandexit," BIS Working Papers 932, Bank for International Settlements.
    8. Lie, Denny, 2021. "Implications of state-dependent pricing for DSGE model-based policy analysis in Indonesia," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 532-552.
    9. PINSHI, Christian P., 2020. "Arithmétique du Pass-through de la COVID 19 sur le Système financier Congolais [COVID-19 Pass-through Arithmetic on the Congolese Financial System]," MPRA Paper 101783, University Library of Munich, Germany.
    10. Peter A.G. van Bergeijk, 2021. "Pandemic Economics," Books, Edward Elgar Publishing, number 20401.
    11. Lorena Skufi & Adam Geršl, 2023. "Using Macrofinancial Models to Simulate Macroeconomic Developments During the COVID-19 Pandemic: The Case of Albania," Eastern European Economics, Taylor & Francis Journals, vol. 61(5), pages 517-553, September.
    12. Sugandi, Eric Alexander, 2020. "Indonesia’s Financial Markets and Monetary Policy Dynamics Amid the Covid-19 Pandemic," ADBI Working Papers 1198, Asian Development Bank Institute.
    13. MALATA, Alain K. & PINSHI, Christian P., 2020. "Système financier et COVID-19 : Un examen de l’impact en RDC [Financial system and COVID-19: A review of the impact in the DRC]," MPRA Paper 107772, University Library of Munich, Germany.
    14. PINSHI, Christian P., 2023. "Claims, Deposits and Financial Conditions in DR Congo: Impact of COVID-19 on the Financial System," MPRA Paper 117381, University Library of Munich, Germany.
    15. Beirne, John Beirne & Renzhi, Nuobu & Sugandi, Eric Alexander & Volz, Ulrich, 2020. "Financial Market and Capital Flow Dynamics During the COVID-19 Pandemic," ADBI Working Papers 1158, Asian Development Bank Institute.

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