IDEAS home Printed from https://ideas.repec.org/a/eee/mateco/v93y2021ics0304406821000203.html
   My bibliography  Save this article

Road to recovery: Managing an epidemic

Author

Listed:
  • Loertscher, Simon
  • Muir, Ellen V.

Abstract

Without widespread immunization, the road to recovery from the current COVID-19 lockdowns will optimally follow a path that finds the difficult balance between the social and economic benefits of liberty and the toll from the disease. We provide an approach that combines epidemiology and economic models, taking as given that the maximum capacity of the healthcare system imposes a constraint that must not be exceeded. Treating the transmission rate as a decreasing function of the severity of the lockdown, we first determine the minimal lockdown that satisfies this constraint using an epidemiology model with a homogeneous population to predict future demand for healthcare. Allowing for a heterogeneous population, we then derive the optimal lockdown policy under the assumption of homogeneous mixing and show that it is characterized by a bang–bang solution. Possibilities such as the capacity of the healthcare system increasing or a vaccine arriving at some point in the future do not substantively impact the dynamically optimal policy until such an event actually occurs.

Suggested Citation

  • Loertscher, Simon & Muir, Ellen V., 2021. "Road to recovery: Managing an epidemic," Journal of Mathematical Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:mateco:v:93:y:2021:i:c:s0304406821000203
    DOI: 10.1016/j.jmateco.2021.102482
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304406821000203
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmateco.2021.102482?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Diamond, P. A. & Maskin, Eric, 1981. "An equilibrium analysis of search and breach of contract II. A non-steady state example," Journal of Economic Theory, Elsevier, vol. 25(2), pages 165-195, October.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    3. Eric Budish, 2020. "Maximize Utility subject to R≤1: A Simple Price-Theory Approach to Covid-19 Lockdown and Reopening Policy," NBER Working Papers 28093, National Bureau of Economic Research, Inc.
    4. repec:rnp:ecopol:09111 is not listed on IDEAS
    5. Abel Brodeur & David Gray & Anik Islam & Suraiya Bhuiyan, 2021. "A literature review of the economics of COVID‐19," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1007-1044, September.
    6. Peter A. Diamond & Eric Maskin, 1979. "An Equilibrium Analysis of Search and Breach of Contract, I: Steady States," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 282-316, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lin William Cong & Ke Tang & Bing Wang & Jingyuan Wang, 2021. "An AI-assisted Economic Model of Endogenous Mobility and Infectious Diseases: The Case of COVID-19 in the United States," Papers 2109.10009, arXiv.org.
    2. Boucekkine, Raouf & Chakraborty, Shankha & Goenka, Aditya & Liu, Lin, 2024. "Economic epidemiological modelling: A progress report," Journal of Mathematical Economics, Elsevier, vol. 113(C).
    3. 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).
    4. Natali Hritonenko & Yuri Yatsenko, 2024. "Analysis of optimal lockdown in integral economic–epidemic model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(1), pages 235-259, February.
    5. Raouf Boucekkine & Shankha Chakraborty & Aditya Goenka & Lin Liu, 2024. "A Brief Tour of Economic Epidemiology Modelling," LIDAM Discussion Papers IRES 2024002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. Jacek Rothert, 2021. "Optimal federal transfers during uncoordinated response to a pandemic," GRAPE Working Papers 58, GRAPE Group for Research in Applied Economics.
    7. Salvatore Federico & Giorgio Ferrari & Maria-Laura Torrente, 2024. "Optimal vaccination in a SIRS epidemic model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(1), pages 49-74, February.
    8. Hubert Kempf & stéphane Rossignol, 2023. "Lockdown policies and the dynamics of a pandemic: foresight, rebounds and optimality," Documents de recherche 23-06, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    9. Jacek Rothert, 2022. "Optimal federal transfers during uncoordinated response to a pandemic," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(5), pages 1124-1153, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claudia M. Landeo & Kathryn E. Spier, 2016. "Stipulated Damages as a Rent-Extraction Mechanism: Experimental Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 235-273, June.
    2. Nobuhiro Kiyotaki & Ricardo Lagos, 2007. "A Model of Job and Worker Flows," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 770-819, October.
    3. Ferreira, Daniel & Ginglinger, Edith & Laguna, Marie-Aude & Skalli, Yasmine, 2017. "Board Quotas and Director-Firm Matching," CEPR Discussion Papers 12117, C.E.P.R. Discussion Papers.
    4. Peter Diamond, 2011. "Unemployment, Vacancies, Wages," American Economic Review, American Economic Association, vol. 101(4), pages 1045-1072, June.
    5. Dirk Niepelt & Mart n Gonzalez-Eiras, 2020. "Optimally Controlling an Epidemic," Diskussionsschriften dp2019, Universitaet Bern, Departement Volkswirtschaft.
    6. Bester, H., 1991. "Bargaining V.S. Price Competition in a Market with Quality Uncertainty," Papers 9113, Tilburg - Center for Economic Research.
    7. Nahum D. Melumad, 1989. "Asymmetric information and the termination of contracts in agencies," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 733-753, March.
    8. Liu, Yang, 2013. "Labor market matching and unemployment in urban China," China Economic Review, Elsevier, vol. 24(C), pages 108-128.
    9. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225, Elsevier.
    10. Farboodi, Maryam & Jarosch, Gregor & Shimer, Robert, 2021. "Internal and external effects of social distancing in a pandemic," Journal of Economic Theory, Elsevier, vol. 196(C).
    11. Samuel Häfner & Georg Nöldeke, 2022. "Sorting in iterated incumbency contests," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(4), pages 1103-1140, November.
    12. Steven Shavell, 2003. "Economic Analysis of Contract Law," NBER Working Papers 9696, National Bureau of Economic Research, Inc.
    13. Manea, Mihai, 2017. "Steady states in matching and bargaining," Journal of Economic Theory, Elsevier, vol. 167(C), pages 206-228.
    14. Spulber, Daniel F., 2016. "Patent licensing and bargaining with innovative complements and substitutes," Research in Economics, Elsevier, vol. 70(4), pages 693-713.
    15. Lewis A. Kornhauser & W. Bentley MacLeod, 2012. "Contracts between Legal Persons [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    16. Lauermann, Stephan & Nöldeke, Georg, 2014. "Stable marriages and search frictions," Journal of Economic Theory, Elsevier, vol. 151(C), pages 163-195.
    17. Danthine, Samuel & De Vroey, Michel, 2017. "The Integration Of Search In Macroeconomics: Two Alternative Paths," Journal of the History of Economic Thought, Cambridge University Press, vol. 39(4), pages 523-548, December.
    18. Christian Korth, 2009. "Fairness, Price Stickiness, and History Dependence in Decentralized Trade," Lecture Notes in Economics and Mathematical Systems, in: Fairness in Bargaining and Markets, chapter 0, pages 81-101, Springer.
    19. Isabelle Lebon, 1994. "Créations d'entreprises et persistance du chômage dans un modèle d'appariement," Revue Économique, Programme National Persée, vol. 45(4), pages 965-988.
    20. Keshab Bhattarai & Huw Dixon, 2014. "Equilibrium Unemployment in a General Equilibrium Model with Taxes," Manchester School, University of Manchester, vol. 82(S1), pages 90-128, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:mateco:v:93:y:2021:i:c:s0304406821000203. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jmateco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.