DP14923 Optimal Lockdown in a Commuting Network

Author(s): Pablo Fajgelbaum, Amit Khandelwal, Wookun Kim, Cristiano Mantovani, Edouard Schaal
Publication Date: June 2020
Keyword(s): commuting, COVID-19, General Equilibrium, lockdown, optimal policy
JEL(s): C6, R38, R4
Programme Areas: Public Economics, International Trade and Regional Economics, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14923

We study optimal dynamic lockdowns against Covid-19 within a commuting network. Our framework combines canonical spatial epidemiology and trade models, and is applied to cities with varying initial viral spread: Seoul, Daegu and NYC-Metro. Spatial lockdowns achieve substantially smaller income losses than uniform lockdowns, and are not easily approximated by simple centrality-based rules. In NYM and Daegu-with large initial shocks-the optimal lockdown restricts inflows to central districts before gradual relaxation, while in Seoul it imposes low temporal but large spatial variation. Actual commuting responses were too weak in central locations in Daegu and NYM, and too strong across Seoul.