Between lives and economy: COVID-19 containment policy in open economies
Journal
European Economic Review
Journal Volume
157
Start Page
104512
ISSN
0014-2921
Date Issued
2023-08
Author(s)
Abstract
This paper studies containment policies for combating a pandemic in an open-economy context. It does so via quantitative analyses using a model that incorporates a standard epidemiological compartmental model in a general equilibrium multi-country, multi-sector Ricardian model of international trade with input–output linkages. We quantitatively evaluate the long-run welfare and real-income losses due to the short-run pandemic shocks, and we study the role of trade in these effects. We devise a novel approach to computing national optimal policies. We find that (1) the long-run welfare and real-income losses due to just two years of pandemic shocks are substantial; (2) international trade helps buffer both the welfare and real-income losses, and it also saves lives; (3) the computed optimal policies indicate that most countries should have tightened their containment measures relative to what was done; and (4) compared to the case of autarky, the optimal policy under trade is generally more stringent.
Subjects
COVID-19
Disease dynamics
Effective reproduction number
Open economy
Optimal containment policy
Pandemic
Trade
Welfare analysis
Publisher
Elsevier BV
Type
journal article