Discussion Paper Details

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Title: Caveats for Economists: Epidemiology-Based Modelling of COVID19 and Model Misspecifications

Author(s): Yinon Bar-On, Tatiana Baron, Ofer Cornfeld, Ron Milo and Eran Yashiv

Publication Date: July 2020

Keyword(s): COVID19, optimal policy, the economy and epidemiological dynamics and transmission timescales

Programme Area(s): Monetary Economics and Fluctuations

Abstract: Rapidly expanding research on COVID19 in Economics typically posits an economy subject to a model of epidemiological dynamics, which is at the core of the analysis. We place this model on the foundations of an epidemiological analysis of the SARS-CoV-2 virus transmission timescales. The contribution is twofold. First, we formulate a full model with epidemiologically-based and clinically-based parameterization. The model features two blocks: an infection transmission block, described by the SEIR-Erlang model, and a clinical block, characterizing the development of symptoms, hospitalization, ICU admission, and recovery or death. The latter is important for the analysis of dynamics of the public health system. Second, we show that there is often serious mis-specification of the model, erroneously characterizing a relatively slow-moving disease, thereby distorting the policymaker decisions towards less severe, delayed intervention. Moreover, the scale of the disease is under-estimated. We also discuss misguided modelling of lockdown policies.

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Bibliographic Reference

Bar-On, Y, Baron, T, Cornfeld, O, Milo, R and Yashiv, E. 2020. 'Caveats for Economists: Epidemiology-Based Modelling of COVID19 and Model Misspecifications'. London, Centre for Economic Policy Research.