This paper estimates a SEIRD (susceptible-exposed-infected-recovered-deaths) epidemic model of COVID-19, which accounts for both observed and unobserved states and endogenous mobility changes induced by lockdown policies. The model is estimated on Lombardy and London â€“ two regions that had among the worst outbreaks of the disease in the world â€“ and used to predict the evolution of the epidemic under different policies. We show that policies targeted also at mitigating the probability of contagion are more effective in containing the spread of the disease, than the one aimed at just gradually reducing the mobility restrictions. In particular, we show that if the probability of contagion is decreased between 20% and 40% of its original level before the outbreak, while increasing mobility, the total death toll would not be higher than in a permanent lockdown scenario. On the other hand, neglecting such policies could increase the risk of a second epidemic peak even while lifting lockdown measures at later dates. This highlights the importance during the containment of the disease of promoting â€œsoftâ€ policy measures that could reduce the probability of contagion, such as, wearing masks and social distancing.
Lattanzio, S and D Palumbo (eds) (2020), “Lifting Restrictions with Changing Mobility and the Importance of Soft Containment Measures: A SEIRD Model of COVID-19 Dynamics”, COVID Economics N/A. https://cepr.org/node/390451
I modify the basic SEIR model to incorporate demand for health care. The model is used to study the relative effectiveness of policy interventions that include social distancing, quarantine, contact tracing, and random testing. A version of the model that is calibrated to the Ferguson et al (2020) model suggests that permanent, high-intensity social distancing reduces mortality rates and peak ICU demand substantially, but that a policy that relaxes high-intensity social distancing over time in the context of a permanent efficient quarantine regime is even more effective. Adding contact tracing and random testing to this policy further improves outcomes. For the policies considered, employment outcomes are determined by their respective social distancing components, not their quarantine component or health outcomes. Given the uncertainty surrounding the disease parameters, especially the transmission rate of the disease, and the effectiveness of policies, the uncertainty for health outcomes, however, is very large.
Hornstein, A (2020), “Social Distancing, Quarantine, Contact Tracing, and Testing: Implications of an Augmented SEIR-Model”, COVID Economics N/A. https://cepr.org/node/390452
We explore how household consumption responds to epidemics, utilizing transaction-level household financial data to investigate the impact of the COVID-19 virus. As the number of cases grew, households began to radically alter their typical spending Â across a number of major categories. Initially spending increased sharply, particularly in retail, credit card spending and food items. This was followed by a sharp decrease in overall spending. Households responded most strongly in states with shelter-in-place orders in place by March 29th. We explore heterogeneity across partisan affiliation, demographics and income. Greater levels of social distancing are associated with drops in spending, particularly in restaurants and retail.
Baker, S, R Farrokhnia, S Meyer, M Pagel and C Yannelis (eds) (2020), “How Does Household Spending Respond to an Epidemic? Consumption During the 2020 COVID-19 Pandemic”, COVID Economics N/A. https://cepr.org/node/390453
Looking at 342 million residents in 21 EU countries, we estimate that 99 million individuals live in households which cannot cover for two months of the most basic expenses â€“ food at home, utilities and rent/mortgage on their single main residence - only from their savings in bank accounts. Without privately earned income but with (pre-covid19) pension income and public transfers, 57 million have savings for less than 2 months. Government support in the form of employment protection schemes and beyond is thus fundamental to ensure livelihood during the covid19 shock, yet many individuals would remain vulnerable if ensured 50% of their gross privately earned income. We estimate mortgage and rent suspension can decrease in half the number of individuals at risk. We find there are stark differences between countries and that individuals born outside of the EU are particularly vulnerable. Those dependent on their income will be forced to resume work earlier and take higher health risks
Chapelle, G (2020), “The Medium Run impact of Non Pharmaceutical Interventions. Evidence from the 1918 In uenza in US cities”, COVID Economics N/A. https://cepr.org/node/390455
In this paper, I hypothesize that internal migrants are key agents in the diffusion of viruses. Self-isolation and closure of economic activities in outbreak areas generate many people jobless or socially isolated. Recently settled migrants might therefore choose to return to their home towns, thus spreading the virus further. To test the existence and the quantitative importance of this mechanism, I use subnational data for Italy. I use panel data at the regional-daily level and exploit detailed data on individuals' changes of residence between Italian regions before Covid to measure, for each region, the number of potential of return migrants from outbreak areas. The results suggest that regions with more exposed to return migration experienced more Covid deaths throughout nearly all stages of diffusion of the virus. A back-of-the-envelope calculation suggests that, had all regions had the same number of migrants in outbreak areas as the one at the tenth percentile, Italy would have experienced around 2000 fewer Covid deaths, i.e, 22-24 percent fewer deaths than the regions outside the outbreak areas actually experienced.
Midões, C (2020), “Who can live without two months of income?”, COVID Economics N/A. https://cepr.org/node/390456
We estimate a nonlinear VAR model allowing for the impact of uncertainty shocks to depend on the average outlook of the economy measured by survey data. We find that, in response to the same uncertainty shock, industrial production and inflation's peak decrease is around three and a half times larger during pessimistic times. We build scenarios for a path of innovations in uncertainty consistent with the COVID-19-induced shock. Industrial production is predicted to experience a year-over-year peak loss of between 15.1% and 19% peaking between September and December 2020, and subsequently to recover with a rebound to pre-crisis levels between May and August 2021. The large impact is the result of an extreme shock to uncertainty occurring at a time of very negative expectations on the economic outlook.
Valsecchi, M (2020), “Internal migration and the spread of Covid-19”, COVID Economics N/A. https://cepr.org/node/391032
A widely held belief is that autocratic governments have been more effective in reducing the movement of people to curb the spread of Covid-19. Using the Oxford COVID-19 Government Response Tracker (OxCGRT), and a real-time dataset with daily information on travel and movement across 111 countries, we find that autocratic regimes imposed more stringent lockdowns and relied more on contact tracing. However, we find no evidence that autocratic governments were more effective in reducing travel, and evidence to the contrary: countries with democratically accountable governments introduced less stringent lockdowns but were more effective in reducing geographic mobility at the same level of policy stringency. In addition, building on a large literature on cross-cultural psychology, we show that for the same policy stringency, countries with collectivist cultural traits experienced larger declines in geographic mobility relative to their more individualistic counterparts. We conclude that, in terms of reducing mobility, collectivist and democratic countries have implemented relatively effective responses to Covid-19.
Pellegrino, G, F Ravenna and G Züllig (eds) (2020), “The Impact of Pessimistic Expectations on the Effects of COVID-19-Induced Uncertainty in the Euro Area”, COVID Economics N/A. https://cepr.org/node/391033
This paper uses a difference-in-differences framework to estimate the causal impact on the mortality rate of non-pharmaceutical interventions (NPIs) used to fight the 1918 inuenza pandemic. The results suggest that NPIs such as school closures and social distancing introduced a trade-off. While they could lower the fatality rate during the peak of the inuenza pandemic, they might also have reduced the herd immunity and significantly increased the death rate in subsequent years. There is no significant association between the implementation of NPIs and cities' growth.
Chen, C, C Frey and G Presidente (eds) (2020), “Democracy, Culture, and Contagion: Political Regimes and Countries Responsiveness to Covid-19”, COVID Economics N/A. https://cepr.org/node/390454