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Reopening Scenarios

Author

Listed:
  • David Baqaee
  • Emmanuel Farhi
  • Michael J. Mina
  • James H. Stock

Abstract

We use a five-age epidemiological model, combined with 66-sector economic accounting, to address a variety of questions concerning the economic reopening. We calibrate/estimate the model using contact survey data and data on weekly historical individual actions and non-pharmaceutical interventions in the weeks ending March 8 – May 16, 2020. Going forward, we model a decision-maker (governor) as following reopening guidelines like those proposed by the White House and the CDC. The sectoral accounting, combined with information on personal proximity and ability to work from home by sector, make it possible to construct a GDP-to-Risk index of which sectors provide the greatest increment in GDP per marginal increase in R0. Through simulations, we find that: a strong economic reopening is possible; a “smart” reopening, preferencing some sectors over others, makes only modest improvements over a broad reopening; and all this hinges on retaining strong restrictions on non-work social contacts. If non-work contacts – going to bars, shopping without social distancing and masks, large group gatherings, etc. – return only half-way to the pre-COVID-19 baseline, the current decline in deaths reverses leading to a second wave of business closures.

Suggested Citation

  • David Baqaee & Emmanuel Farhi & Michael J. Mina & James H. Stock, 2020. "Reopening Scenarios," NBER Working Papers 27244, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27244
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    References listed on IDEAS

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    Cited by:

    1. Michael D. Bordo & Andrew T. Levin & Mickey D. Levy, 2020. "Incorporating Scenario Analysis into the Federal Reserve’s Policy Strategy and Communications," NBER Working Papers 27369, National Bureau of Economic Research, Inc.
    2. Chernozhukov, Victor & Kasahara, Hiroyuki & Schrimpf, Paul, 2021. "Causal impact of masks, policies, behavior on early covid-19 pandemic in the U.S," Journal of Econometrics, Elsevier, vol. 220(1), pages 23-62.
    3. Christopher Avery & William Bossert & Adam Clark & Glenn Ellison & Sara Fisher Ellison, 2020. "An Economist's Guide to Epidemiology Models of Infectious Disease," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 79-104, Fall.

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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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