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Discussion Paper Details

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Title: Restarting the economy while saving lives under Covid-19

Author(s): Carlo A. Favero, Andrea Ichino and Aldo Rustichini

Publication Date: April 2020

Keyword(s): COVID19, post lockdown policies and SEIR model

Programme Area(s): Labour Economics and Public Economics

Abstract: We provide, calibrate and test a realistic model of the spread of SARS-Cov-2 in an economy with different risks related to age and sectors. The model considers hospital congestion and response of individuals adjusting their behavior to the virus' spread. We measure precisely the size of these effects using real data for Italy on intensive care capacity and mobility decisions; thus our claim is that the tradeoffs we estimate are quantitatively, rather than qualitatively, approximately correct. We characterize the policies of containment of the epidemic that are efficient with respect to number of fatalities and GDP loss. Prudent policies of gradual return to work may save many lives with limited economic costs, as long as they differentiate by age group and risk sector. More careful behavior of individuals induced by the perceived cost of infection may contribute to further reduce fatalities.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14664

Bibliographic Reference

Favero, C, Ichino, A and Rustichini, A. 2020. 'Restarting the economy while saving lives under Covid-19'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14664