COVID-19 Impact and Mitigation Policies: A Didactic Epidemiological-Macroeconomic Model Approach

By John P. Ansah, Natan P. Epstein, Valeriu Nalban

November 8, 2020

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John P. Ansah, Natan P. Epstein, and Valeriu Nalban. COVID-19 Impact and Mitigation Policies: A Didactic Epidemiological-Macroeconomic Model Approach, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We develop an integrated epidemiological-macroeconomic model to analyze the interplay between the COVID-19 outbreak and economic activity, as a tool for capacity building purposes. We illustrate a workhorse framework that combines a rich epidemiological model with an economic block to shed light on the tradeoffs between saving lives and preserving economic outcomes under various mitigation policies and scenarios calibrated for emerging market and developing economies. In our benchmark setup, we link the effective contact frequency and labor supply decisions to the current state of the disease progression, allowing for relevant behavioral responses that introduce multiple feedback channels. We showcase the effects of various “smart” mitigation measures, e.g. improved quarantine capacity or targeted labor market restrictions, to alleviate the tradeoffs between health-related outcomes and economic activity, including in response to a second infection wave. The discovery of treatment or vaccine, and the possibility of temporary immunity for the recovered individuals are also considered. The model is further extended to a multisector framework to analyze the sectoral allocation effects of the COVID-19 shock.

Subject: COVID-19, Health, Labor, Labor markets, Population and demographics

Keywords: COVID-19, Emerging market and developing economies, Epidemiological model, Global, Government-mandated lockdown, Infection curve, Infection intensity, Infection prevalence, Infection rate, Infection risk, Infection wave, Labor markets, Latency period, Lockdown measure, Macroeconomics, Mitigation policy, Pandemic, Viral load, Virus transmission rate, Wave scenario, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/233
Stock No:

WPIEA2020233
ISBN:

9781513560427
ISSN:

1018-5941

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