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Lockdowns as options

Author

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  • S.J.G. van Wijnbergen

    (University of Amsterdam)

Abstract

I show that the irreversibility of dying coupled with gradual information acquisition over time on the likely arrival and eventual effectiveness of vaccines confers a real option value to lockdown strategies that delay the incidence of a pandemic.The case for lockdown strategies becomes stronger the more likely vaccine discovery is, and the less uncertainty exists about its effectiveness.

Suggested Citation

  • S.J.G. van Wijnbergen, 2021. "Lockdowns as options," Tinbergen Institute Discussion Papers 21-037/IV, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20210037
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    References listed on IDEAS

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    1. Andrew Atkeson, 2021. "A Parsimonious Behavioral SEIR Model of the 2020 COVID Epidemic in the United States and the United Kingdom," NBER Working Papers 28434, National Bureau of Economic Research, Inc.
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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