Gori L, Manfredi P, Marsiglio S, Sodini M. COVID-19 epidemic and mitigation policies: Positive and normative analyses in a neoclassical growth model.
JOURNAL OF PUBLIC ECONOMIC THEORY 2021;
24:JPET12549. [PMID:
34908825 PMCID:
PMC8661658 DOI:
10.1111/jpet.12549]
[Citation(s) in RCA: 6] [Impact Index Per Article: 2.0] [Reference Citation Analysis] [Abstract] [Track Full Text] [Subscribe] [Scholar Register] [Received: 02/27/2021] [Revised: 10/04/2021] [Accepted: 10/07/2021] [Indexed: 05/22/2023]
Abstract
The COVID-19 pandemic is still ravaging the planet, but its (short-, medium-, and long-term) diverse effects on health, economy, and society are far from being understood. This article investigates the potential impact of a deadly epidemic and its main nonpharmaceutical control interventions (social distancing vs. testing-tracing-isolation, TTI) on capital accumulation and economic development at different time scales. This is done by integrating an epidemiological susceptible-infectious-recovered model with a Solow-type growth model including public expenditure, as a parsimonious setting to offer insights on the trade-off between protecting human lives and the economy and society. The work clarifies (i) the long-term interactions amongst a deadly infection, demography, and capital accumulation, (ii) the lack of viability of persistent social distancing measures also using an analytical characterization, and the threat of policy-enhanced COVID-19 endemicity, (iii) the potentially high return on investments in TTI activities to avoid future lockdowns and related capital disruption. It also quantifies the welfare effects of a range of policies, confirming a counterintuitive role for tax-funded preventive investments aimed at strengthening TTI as more desirable interventions than generalized lockdowns.
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