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The effect of health and economic costs on governments' policy responses to COVID-19 crisis, under incomplete information

Author

Listed:
  • Germà Bel

    (Departament d’Econometria, Estadística I Economia Aplicada- Universitat de Barcelona.)

  • Óscar Gasulla

    (Hospital Universitari de Bellvitge – Universitat de Barcelona.)

  • Ferran A. Mazaira-Font

    (Departament d’Econometria, Estadística I Economia Aplicada- Universitat de Barcelona.)

Abstract

COVID-19 outbreak has become an unprecedented health, economic and social crisis. We build a theoretical model, based on which we develop an empirical strategy to analyze the drivers of the agility of policy response to the outbreak. Our empirical results show that government overconfidence in its own country capacity of health services and the intensity of expected economic costs from hard measures to manage the crisis delayed policy response. Contrarily, being a game against nature with incomplete information, increased knowledge and reduced uncertainty on other countries’ policy responses and on the epidemic development increased the agility of the country’s policy response.

Suggested Citation

  • Germà Bel & Óscar Gasulla & Ferran A. Mazaira-Font, 2020. "The effect of health and economic costs on governments' policy responses to COVID-19 crisis, under incomplete information," IREA Working Papers 202008, University of Barcelona, Research Institute of Applied Economics, revised Jun 2020.
    • Handle: RePEc:ira:wpaper:202008
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    File URL: http://www.ub.edu/irea/working_papers/2020/202008.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; Crisis management; Public policy; Policy response. JEL classification: D81; H12; I18.;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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