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The possible macroeconomic impact on the UK of an influenza pandemic

Author

Listed:
  • 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.

Suggested Citation

  • Marcus R. Keogh-Brown & Simon Wren-Lewis & W. John Edmunds & Philippe Beutels & Richard D. Smith, 2010. "The possible macroeconomic impact on the UK of an influenza pandemic," Health Economics, John Wiley & Sons, Ltd., vol. 19(11), pages 1345-1360.
  • Handle: RePEc:wly:hlthec:v:19:y:2010:i:11:p:1345-1360
    DOI: 10.1002/hec.1554
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    References listed on IDEAS

    as
    1. 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.
    2. 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 543-559, May.
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    6. 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.
    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. Lars Jonung & Werner Roeger, 2006. "The macroeconomic effects of a pandemic in Europe - A model-based assessment," European Economy - Economic Papers 2008 - 2015 251, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    9. 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.
    10. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why did the UK become a failed state?
      by Mainly Macro in Mainly Macro on 2019-08-20 08:28:00

    Citations

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    Cited by:

    1. George Verikios & Maura Sullivan & Pane Stojanovski & James Giesecke & Gordon Woo, 2016. "Assessing Regional Risks From Pandemic Influenza: A Scenario Analysis," The World Economy, Wiley Blackwell, vol. 39(8), pages 1225-1255, August.
    2. 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," Darmstadt Discussion Papers in Economics 211, Darmstadt University of Technology, Department of Law and Economics.
    3. George Verikios & Peter B. Dixon & Maureen T. Rimmer & Anthony H. Harris, 2013. "The Impact of Changes in Health Status: An Economywide Analysis for Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-231, Victoria University, Centre of Policy Studies/IMPACT Centre.
    4. Richard Smith, 2008. "Globalization: the key challenge facing health economics in the 21st century," Health Economics, John Wiley & Sons, Ltd., vol. 17(1), pages 1-3.
    5. Verikios, George & Dixon, Peter B. & Rimmer, Maureen T. & Harris, Anthony H., 2015. "Improving health in an advanced economy: An economywide analysis for Australia," Economic Modelling, Elsevier, vol. 46(C), pages 250-261.
    6. George Verikios, 2017. "The importance of periodicity in modelling infectious disease outbreaks," Discussion Papers in Economics economics:201711, Griffith University, Department of Accounting, Finance and Economics.
    7. 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.
    8. Joseph H. Cook, 2013. "Principles and standards for benefit–cost analysis of public health preparedness and pandemic mitigation programs," Chapters,in: Principles and Standards for Benefit–Cost Analysis, chapter 3, pages 110-152 Edward Elgar Publishing.
    9. repec:gam:jsusta:v:10:y:2018:i:4:p:1232-:d:141707 is not listed on IDEAS
    10. Judith Kabajulizi, 2013. "Macroeconomic Implications Of Health Sector Reforms In Uganda: A Computable General Equilibrium Analysis," EcoMod2013 5158, EcoMod.
    11. 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.
    12. Smith, Richard D. & Keogh-Brown, Marcus R. & Barnett, Tony, 2011. "Estimating the economic impact of pandemic influenza: An application of the computable general equilibrium model to the UK," Social Science & Medicine, Elsevier, vol. 73(2), pages 235-244, July.

    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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