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The possible macroeconomic impact on the UK of an influenza pandemic

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  • Simon Wren-Lewis
  • Marcus Keogh-Brown
  • W. John Edmunds
  • Philippe Beutels and Richard D. Smith

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 to our severe scenario reductions of 29.5%. These results clearly indicate the significance of behavioural change over disease parameters.

Suggested Citation

  • Simon Wren-Lewis & Marcus Keogh-Brown & W. John Edmunds & Philippe Beutels and Richard D. Smith, 2009. "The possible macroeconomic impact on the UK of an influenza pandemic," Economics Series Working Papers 431, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:431
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Pandemic; Influenza; Simulation; COMPACT;
    All these keywords.

    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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