Economic impact of government interventions during the COVID-19 pandemic: International evidence from financial markets

The goal of this piece is to survey the developing and rapidly growing literature on the economic consequences of COVID-19 and the governmental responses, and to synthetize the insights emerging from a very large number of studies. This survey: (i) provides an overview of the data sets and the techniques employed to measure social distancing and COVID-19 cases and deaths; (ii) reviews the literature on the determinants of compliance with and the effectiveness of social distancing; (iii) mentions the macroeconomic and financial impacts including the modelling of plausible mechanisms; (iv) summarizes the literature on the socioeconomic consequences of COVID-19, focusing on those aspects related to labor, health, gender, discrimination, and the environment; and (v) summarizes the literature on public policy responses.

https://www.econstor.eu/bitstream/10419/222316/1/GLO-DP-0601.pdf

A literature review of the economics of COVID-19

Correlation between environmental pollution indicators and COVID-19 pandemic: A brief study in Californian context.

We examine the net benefits of social distancing to slow the spread of COVID-19 in USA. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit–cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

/pdf/the-benefits-and-costs-of-using-social-distancing-to-flatten-5wyw0e89pt.pdf

The Benefits and Costs of Using Social Distancing to Flatten the Curve for COVID-19

We study the response of an economy to an unexpected epidemic. Households mitigate the spread of the disease by reducing consumption, reducing hours worked, and working from home. Working from home is subject to learning-by-doing and the capacity of the health care system is limited. A social planner worries about two externalities, an infection externality and a healthcare congestion externality. Private agents’ mitigation incentives are weak and biased. We show that private safety incentives can even decline at the onset of the epidemic. The planner, on the other hand, implements front-loaded mitigation policies and encourages working from home immediately. In our calibration, assuming a CFR of 1% and an initial infection rate of 0.1%, private mitigation reduces the cumulative death rate from 2.5% of the initially susceptible population to about 1.75%. The planner optimally imposes a drastic suppression policy and reduces the death rate to 0.15% at the cost of an initial drop in consumption of around 25%.

https://www.nber.org/system/files/working_papers/w26984/w26984.pdf

Optimal Mitigation Policies in a Pandemic: Social Distancing and Working from Home

This paper develops and implements a method to monetize the impact of moderate social distancing on deaths from COVID-19. Using the Ferguson et al. (2020) simulation model of COVID-19’s spread and mortality impacts in the United States, we project that 3-4 months of moderate distancing beginning in late March 2020 would save 1.7 million lives by October 1. Of the lives saved, 630,000 are due to avoided overwhelming of hospital intensive care units. Using the projected age-specific reductions in death and age-varying estimates of the United States Government’s value of a statistical life, we find that the mortality benefits of social distancing are about $8 trillion or $60,000 per US household. Roughly 90% of the monetized benefits are projected to accrue to people age 50 or older. Overall, the analysis suggests that social distancing initiatives and policies in response to the COVID-19 epidemic have substantial economic benefits.

/pdf/does-social-distancing-matter-16hvflb5bp.pdf

Does Social Distancing Matter

This paper develops and implements a method to monetize the impact of moderate social distancing on deaths from OVID-19. Using the Ferguson et al. (2020) simulation model of COVID-19â€™s spread and mortality impacts in the United States, we project that 3-4 months of moderate distancing beginning in late March 2020 Would save 1.7 million lives by October 1. Of the lives saved,630,000 are due to avoided overwhelming of hospital intensive care units. Using the projected age-specific reductions in death and age-varying estimates of the United States Governmentâ€™s value of a statistical life, we find that the mortality benefits of social distancing are about $8 trillion or $60,000 per US household. Roughly 90% of the monetized benefits are projected to accrue to people age 50 or older. Overall, the analysis suggests that social distancing initiatives and policies in response to the COVID-19 epidemic have substantial economic benefits.

Vishan Nigam

Papers

Does Social Distancing Matter

Does Social Distancing Matter