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The role of vaccination in a model of asset pricing during a pandemic

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  • Yuta Saito

Abstract

This paper examines the effect of pandemic vaccination on asset prices in a simple asset pricing model à la Lucas 1978. In this model, asset prices depend on susceptible individuals’ saving motives to insure against a reduction in labour income due to getting they get the virus. Hence distributing vaccine reduces precautionary saving motives and asset prices. This implies that reducing the income gap between susceptible and infected individuals, such as by cash handouts, eases the negative effect of vaccine supply on asset prices.

Suggested Citation

  • Yuta Saito, 2022. "The role of vaccination in a model of asset pricing during a pandemic," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-6, April.
    • Handle: RePEc:plo:pone00:0266511
    DOI: 10.1371/journal.pone.0266511
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    References listed on IDEAS

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    1. Rietz, Thomas A., 1988. "The equity risk premium a solution," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 117-131, July.
    2. Robert J. Barro, 2006. "Rare Disasters and Asset Markets in the Twentieth Century," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(3), pages 823-866.
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