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Getting ready for the next pandemic: supply- side policies to escape the health-vs-economy dilemma

Author

Listed:
  • Luca Portoghese

    (University of Pavia)

  • Patrizio Tirelli

    (University of Pavia)

Abstract

In our simple macroeconomic model, firms have the option of reallocating output between contact-intensive and online retail trade, where the former contributes to the persistence of the pandemic shock while the latter does not. All this paves the way for the analysis of optimal supply-side fiscal policies that must strike a balance between shock miti- gation (lockdown) and the conventional macroeconomic stabilisation objective (subsidy to the online retail sector). In fact, we observe a complementarity between the strength of the optimal subsidy that allows to stabilize consumption and the lockdown policy aimed at controlling the epidemic shock. This conclusion is strengthened if employment raises the persistence of the epidemic shock.

Suggested Citation

  • Luca Portoghese & Patrizio Tirelli, 2024. "Getting ready for the next pandemic: supply- side policies to escape the health-vs-economy dilemma," DEM Working Papers Series 219, University of Pavia, Department of Economics and Management.
    • Handle: RePEc:pav:demwpp:demwp0219
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    File URL: https://economiaemanagement.dip.unipv.it/sites/dip10/files/2024-04/DEMWP0219.pdf
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    More about this item

    Keywords

    Pandemic shock; lockdown; supply side policies; macroeconomic stabilisation; online retail trade;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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