We develop an ECON-EPI network model to evaluate policies designed to improve health and economic outcomes during a pandemic. Relative to the standard epidemiological SIR set-up, we explicitly model social contacts among individuals and allow for heterogeneity in their number and stability. In addition, we embed the network in a structural economic model describing how contacts generate economic activity. We calibrate it to the New York metro area during the 2020 COVID-19 crisis and show three main results. First, the ECON-EPI network implies patterns of infections that better match the data compared to the standard SIR. The switching during the early phase of the pandemic from unstable to stable contacts is crucial for this result. Second, the model suggests the design of smart policies that reduce infections and at the same time boost economic activity. Third, the model shows that re-opening sectors characterized by numerous and unstable contacts (such as large events or schools) too early leads to fast growth of infections.
Azzimonti, M, A Fogli, F Perri and M Ponder (2020), ‘Pandemic Control in ECON-EPI Networks‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_391052
Covid-19 vaccine prioritization is key if the initial supply of the vaccine is limited. A consensus is emerging to first prioritize populations facing a high risk of severe illness in high-exposure occupations. The challenge is assigning priorities next among high-risk populations in low-exposure occupations and those that are young and healthy but work in high-exposure occupations. We estimate occupation-based infection risks and use age-based infection fatality rates in a model to assign priorities over populations with different occupations and ages. Among others, we find that 50-year-old food-processing workers and 60-year-old financial advisors are equally prioritized. Our model suggests a vaccine distribution that emphasizes age-based mortality risk more than occupation-based exposure risk. Designating some occupations as essential does not affect the optimal vaccine allocation unless a stay-at-home order is also in effect. Even with vaccines allocated optimally, 1.37% of the employed workforce is still expected to be infected with the virus until the vaccine becomes widely available, provided the vaccine is 50% effective, and assuming a supply of 60mil doses.
Babus, A, S Das and S Lee (2020), ‘The Optimal Allocation of Covid-19 Vaccines‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_391053
This paper investigates whether the COVID-19 crisis has affected the way we think about (political) institutions, as well as our broader (policy) attitudes and values. We fielded large online survey experiments in Italy, Spain, Germany and the Netherlands, well into the first wave of the epidemic (May-June), and included outcome questions on trust, voting intentions, policies & taxation, and identity & values. With a randomised survey flow we vary whether respondents are given COVID-19 priming questions first, before answering the outcome questions. With this treatment design we can also disentangle the health and economic effects of the crisis, as well as a potential â€œrally around the flagâ€ component. We find that the crisis has brought about severe drops in interpersonal and institutional trust, as well as lower support for the EU and social welfare spending financed by taxes. This is largely due to economic insecurity, but also because of health concerns. A rallying effect around (scientific) expertise combined with populist policies losing ground forms the other side of this coin, and suggests a rising demand for competent leadership.
Daniele, G, A Martinangeli, F Passarelli, W Sas and L Windsteiger (2020), ‘Wind of Change? Experimental Survey Evidence on the COVID-19 Shock and Socio-Political Attitudes in Europe‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_390594
By scraping data of almost 17 trillion plays of songs on Spotify in six European countries, this work provides evidence that the lockdown imposed in the midst of the COVID-19 pandemic significantly changed the music consumption in terms of nostalgia. This work constructs a binary measure of nostalgia consumption of music and employs country-specific logistic regressions in which lockdown is taken as a treatment that interacts with a quadratic trend. The lockdown altered the trend of nostalgia consumption upward, which peaked roughly 60 days after the lockdown. A placebo test shows that the upward turn of slope is not an annual pattern. On the other hand, COVID incidence rate does not provide significant additional explanatory power to the model. This work shows that Spotify's users react to the lockdown even when COVID incidence rate is low and the impact stays high even the incidence rate has peaked, suggesting that demand for nostalgia tends to respond to the drastic and lasting change caused by the lockdown rather than to the fluctuations in the viral infection.
Yeung, T (2020), ‘Did the COVID-19 Pandemic trigger nostalgia? Evidence of Music Consumption on Spotify‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_390595
We examine the short-term labour market effects of COVID-19 and the associated national lockdown in Australia by estimating person-fixed-effects models using the Longitudinal Labour Force Survey. COVID-19 decreased labour force participation (LFP) by 2.1%, increased unemployment by 1.1% and reduced weekly working hours by 1.1. The national lockdown decreased LFP by 3.3%, increased unemployment by 1.7%, and decreased weekly working hours by 2.5. The probability of working on Fridays decreased by 10% while working fewer hours due to being on leave, work shifts, not having enough work and losing jobs all increased due to the lockdown. The pandemic and the lockdown increased underemployment and job search efforts significantly. In terms of heterogeneity of these effects, our analysis shows that those with up to high-school education experienced larger reductions in their LFP and working hours than others. However, immigrants and individuals with shorter job tenure or occupations unsuitable for remote work were hit the hardest in terms of unemployment.
Guven, C, P Sotirakopoulos and A Ulker (2020), ‘Short-term Labour Market Effects of COVID-19 and the Associated National Lockdown in Australia‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_390596
This note evaluates the expected economic toll of the Covid-19 pandemic in the Consensus Forecast surveys. It employs the surveys' forecasts at different horizons. Its main findings are as follows. First, the recovery is expected to be neither U- nor V-shaped but ``akin to a lopsided square root sign'' (Tett (2020)). Second, because the recovery is slow and incomplete, GDP losses during the Lockdown represent a small fraction of the total GDP loss, expected to reach 3 to 4% per annum for the developed countries under review. Third, there are massive differences in the economic toll among countries, which are only partly explained by their public-health performances.
Pujol, T (2020), ‘The long-term economic cost of Covid-19 in the Consensus Forecasts‘, COVID Economics 44, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-44#392514_392920_390597