Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219108 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8290
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
How much and when should we limit economic and social activity to ensure that the health-care system is not overwhelmed during an epidemic? We study a setting where ICU resources are constrained while suppression is costly (e.g., limiting economic interaction). Providing a fully analytical solution we show that the common wisdom of “flattening the curve”, where suppression measures are continuously taken to hold down the spread throughout the epidemic, is suboptimal. Instead, the optimal suppression is discountinuous. The epidemic should be left unregulated in a first phase and when the ICU constraint is approaching society should quickly lock down (a discontinuity). After the lockdown regulation should gradually be lifted, holding the rate of infected constant thus respecting the ICU resources while not unnecessarily limiting economic activity. In a final phase, regulation is lifted. We call this strategy “filling the box”.
Subjects: 
Covid-19
corona
epidemic
pandemic
suppression
control optimality
health
infection.
JEL: 
C61
D60
I18
Document Type: 
Working Paper
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