DP14658 A Simple Planning Problem for COVID-19 Lockdown

Author(s): Fernando Alvarez, David Argente, Francesco Lippi
Publication Date: April 2020
Keyword(s): Dynamic programming, epidemic control, lockdown, Quarantine
JEL(s): C61, I10, I18
Programme Areas: International Macroeconomics and Finance
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14658

We study the optimal lockdown policy for a planner who controls the fatalities of a pandemic while minimizing the output costs of the lockdown. The policy depends on the fraction of infected and susceptible in the population, prescribing a severe lockdown beginning two weeks after the outbreak, covering 60% of the population after a month, and gradually withdrawing to 20% of the population after 3 months. The intensity of the optimal lockdown depends on the gradient of the fatality rate with respect to the infected, and the availability of antibody testing that yields a welfare gain of 2% of GDP.