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Optimal Epidemic Control

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  • Mart n Gonzales-Eiras, Dirk Niepelt

Abstract

We develop a exible single-state model to represent tradeoffs between infections and activity during the early phase of an epidemic. We prove that optimal policy is continuous in the state but discontinuous in the deterministic arrival date of a cure; optimal lockdowns are followed by stimulus policies; and re-infection risk renders laissez faire ineffcient even in steady state. Calibrated to the COVID-19 pandemic the model prescribes initial activity reductions of 38 percent. Stimulus policies account for a third of the welfare gains of intervention. Robustness along many dimensions contrasts with sensitivity of the policy prescriptions with respect to the intertemporal elasticity of substitution, activity-infections nexus, and re-infection risk.

Suggested Citation

  • Mart n Gonzales-Eiras, Dirk Niepelt, 2023. "Optimal Epidemic Control," Diskussionsschriften dp2311, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp2311
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    References listed on IDEAS

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    1. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2022. "The political economy of early COVID-19 interventions in US states," Journal of Economic Dynamics and Control, Elsevier, vol. 140(C).
    2. Bisin, Alberto & Moro, Andrea, 2022. "JUE insight: Learning epidemiology by doing: The empirical implications of a Spatial-SIR model with behavioral responses," Journal of Urban Economics, Elsevier, vol. 127(C).
    3. Facundo Piguillem & Liyan Shi, 2022. "Optimal Covid-19 Quarantine and Testing Policies," The Economic Journal, Royal Economic Society, vol. 132(647), pages 2534-2562.
    4. Chryssi Giannitsarou & Stephen Kissler & Flavio Toxvaerd, 2021. "Waning Immunity and the Second Wave: Some Projections for SARS-CoV-2," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 321-338, September.
    5. Mark Gersovitz & Jeffrey S. Hammer, 2004. "The Economical Control of Infectious Diseases," Economic Journal, Royal Economic Society, vol. 114(492), pages 1-27, January.
    6. 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.
    7. Moll, Benjamin & Kaplan, Greg & Violante, Giovanni, 2020. "The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the U.S," CEPR Discussion Papers 15256, C.E.P.R. Discussion Papers.
    8. Daron Acemoglu & Victor Chernozhukov & Iván Werning & Michael D. Whinston, 2021. "Optimal Targeted Lockdowns in a Multigroup SIR Model," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 487-502, December.
    9. Gonzalez-Eiras, Martin & Niepelt, Dirk, 2020. "On the Optimal "Lockdown" During an Epidemic," CEPR Discussion Papers 14612, C.E.P.R. Discussion Papers.
    10. Pablo D. Fajgelbaum & Amit Khandelwal & Wookun Kim & Cristiano Mantovani & Edouard Schaal, 2021. "Optimal Lockdown in a Commuting Network," American Economic Review: Insights, American Economic Association, vol. 3(4), pages 503-522, December.
    11. Martín Gonzalez-Eiras & Dirk Niepelt, 2020. "Tractable Epidemiological Models for Economic Analysis," CESifo Working Paper Series 8342, CESifo.
    12. Pietro Garibaldi & Espen R. Moen & Christopher A. Pissarides, 2024. "Static and dynamic inefficiencies in an optimizing model of epidemics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(1), pages 9-48, February.
    13. Miclo, Laurent & Spiro, Daniel & Weibull, Jörgen, 2022. "Optimal epidemic suppression under an ICU constraint: An analytical solution," Journal of Mathematical Economics, Elsevier, vol. 101(C).
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    15. Glenn Ellison, 2020. "Implications of Heterogeneous SIR Models for Analyses of COVID-19," NBER Working Papers 27373, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Epidemic; lockdown; stimulus; logistic model; optimal control; COVID-19;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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