This paper develops and implements a method to monetize the impact of moderate social distancing on deaths from Covid-19. Using the Ferguson et al. (2020) simulation model of Covid-19â€™s spread and mortality impacts in the United States, we project that three to four months of moderate distancing beginning in late March 2020 would save 1.7 million lives by October 1. Of the lives saved, 630,000 are due to avoided overwhelming of hospital intensive care units. Using the projected age-specific reductions in death and age-varying estimates of the United States Governmentâ€™s value of a statistical life, we find that the mortality benefits of social distancing are about $8 trillion or $60,000 per US household. Roughly nine-tenths of the monetized benefits are projected to accrue to people age 50 or older. Overall, the analysis suggests that social distancing initiatives and policies in response to the Covid-19 epidemic have substantial economic benefits.
Greenstone, M and V Nigam (2020), ‘Does Social Distancing Matter?‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390386
In a pandemic recession an extraordinary monetary policy â€“ helicopter money â€“ can be considered. If we define helicopter money as a monetization of irredeemable fiscal transfers to citizens that produces losses in the central bank balance sheet, and an independent central bank acts as a long-sighted policymaker, an optimal helicopter monetary policy can be identified. Yet, if the government in charge is made up of career-concerned politicians and citizens are heterogenous, the policy mix will produce distributional effects, and conflicts between politicians and central bankers will be likely. Political pressures will arise and the optimal helicopter money option will be less likely. The framework is applied in a discussion of the economics and politics of issuing COVID-19 perpetual bonds with the European Central Bank as the buyer.
Masciandaro, D (2020), ‘COVID-19 Helicopter money: Economics and politics‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390387
This paper introduces a dynamic panel SIR (DP-SIR) model to investigate the impact of non-pharmaceutical interventions (NPIs) on the COVID-19 transmission dynamics with panel data from 9 countries across the globe. By constructing scenarios with different combinations of NPIs, our empirical findings suggest that countries may avoid the lockdown policy with imposing school closure, mask wearing and centralized quarantine to reach similar outcomes on controlling the COVID-19 infection. Our results also suggest that, as of April 4th, 2020, certain countries such as the U.S. and Singapore may require additional measures of NPIs in order to control disease transmissions more effectively, while other countries may cautiously consider to gradually lift some NPIs to mitigate the costs to the overall economy.
Chen, X and Z Qiu (2020), ‘Scenario analysis of non-pharmaceutical interventions on global COVID-19 transmissions‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390388
We embed a lockdown choice in a simplified epidemiological model and derive formulas for the optimal lockdown intensity and duration. The optimal policy reflects the rate of time preference, epidemiological factors, the hazard rate of vaccine discovery, learning effects in the health care sector, and the severity of output losses due to a lockdown. In our baseline specification a Covid-19 shock as currently experienced by the US optimally triggers a reduction in economic activity by two thirds, for about 50 days, or approximately 9.5 percent of annual GDP.
Gonzalez-Eiras, M and D Niepelt (2020), ‘On the Optimal "Lockdown" During an Epidemic‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390389
This paper uses transaction-level customer data from the largest bank in Denmark to estimate consumer responses to the COVID-19 pandemic and the partial shutdown of the economy. We find that aggregate card spending has dropped sharply by around 25% following the shutdown. The drop is mostly concentrated on goods and services whose supply is directly restricted by the shutdown, suggesting a limited role for spillovers to non-restricted sectors through demand in the short term. The spending drop is somewhat larger for individuals more exposed to the economic risks and health risks introduced by the COVID-19 crisis; however, pre-crisis spending shares in the restricted sectors is a much stronger correlate of spending responses.
Andersen, A, N Johannesen, A Sheridan and E Toft Hansen (2020), ‘Consumer Reponses to the COVID-19 Crisis: Evidence from Bank Account Transaction Data‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390390
Are lockdown policies effective at inducing physical distancing to counter the spread of COVID-19? Can less restrictive measures that rely on voluntary community action achieve a similar effect? Using data from 40 million mobile devices, we find that a lockdown increases the percentage of people who stay at home by 8% across US counties. Grouping states with similar outbreak trajectories together and using an instrumental variables approach, we show that time spent at home can increase by as much as 39%. Moreover, we show that individuals engage in limited physical distancing even in the absence of such policies, once the virus takes hold in their area. Our analysis suggests that non-causal estimates of lockdown policiesâ€™ effects can yield biased results. We show that counties where people have less distrust in science, are more highly educated, or have higher incomes see a substantially higher uptake of voluntary physical distancing. This suggests that the targeted promotion of distancing among less responsive groups may be as effective as across-the-board lockdowns, while also being less damaging to the economy.
Brzezinski, A, G Deiana, V Kecht and D Van Dijcke (2020), ‘The COVID-19 Pandemic: Government vs. Community Action Across the United States‘, COVID Economics 7, CEPR Press, Paris & London. https://cepr.org/publications/covid-economics-issue-7#392514_392883_390391