Covid-19: Health or economy?

Topics

• Is there a trade off between economic and health outcomes?

Microsimulation model

• Which policies are effective in reducing the spread of Covid-19?
• What are the costs of these policies in terms of foregone output (value added) and employment?
• Who are the most effected by these policies?
• What could the government do to reduce the social and economic cost of Covid-19?

Covid-19 measures

• Stay-at-home rules (partial/general)
• Closing down businesses (restaurants, tourism, etc)
• Restricting certain (mass) activities (conferences, concerts, etc)
• Travel restrictions (local, national and international)
• Closing schools/on-line education
• Others
  • Testing and filiation
    
  • Masks, social distancing
  • Teleworking

Economic effects of Covid-19 measures

Short run

• Decline in output and employment
  • Closing down businesses
  • Reducing (consumption) expenditures
    • Uncertainty and restrictions
    • Increasing unemployment
      • Income support
  • Decline in investment
  • Decline in foreign demand (declining exports)

Economic effects of Covid-19 measures

Long term

• Depreciation of human capital
  • Health problems
  • Problems in education/access to on-line education
  • Increasing youth unemployment
• Declining investment
• Changes in consumer behavior
• Changes in the direction of technological change

Health vs economics

Economic effect: Level x Duration (-) Health effect: Level x Duration (+)

• Economic effects
  • Decline in value added and employment
  • Policy stringency index
  • Google mobility index
    • Workplace mobility, retail and recreation mobility, etc
• Health effects
  • Covid-19 deaths
  • Additional deaths
  • Case numbers