Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/305216 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Economic Interaction and Coordination [ISSN:] 1860-7128 [Volume:] 18 [Issue:] 2 [Publisher:] Springer [Place:] Berlin, Heidelberg [Year:] 2022 [Pages:] 311-370
Publisher: 
Springer, Berlin, Heidelberg
Abstract: 
We analyze the impact of different designs of COVID-19-related lockdown policies on economic loss and mortality using a micro-level simulation model, which combines a multi-sectoral closed economy with an epidemic transmission model. In particular, the model captures explicitly the (stochastic) effect of interactions between heterogeneous agents during different economic activities on virus transmissions. The empirical validity of the model is established using data on economic and pandemic dynamics in Germany in the first 6 months after the COVID-19 outbreak. We show that a policy-inducing switch between a strict lockdown and a full opening-up of economic activity based on a high incidence threshold is strictly dominated by alternative policies, which are based on a low incidence threshold combined with a light lockdown with weak restrictions of economic activity or even a continuous weak lockdown. Furthermore, also the ex ante variance of the economic loss suffered during the pandemic is substantially lower under these policies. Keeping the other policy parameters fixed, a variation of the consumption restrictions during the lockdown induces a trade-off between GDP loss and mortality. Furthermore, we study the robustness of these findings with respect to alternative pandemic scenarios and examine the optimal timing of lifting containment measures in light of a vaccination rollout in the population.
Subjects: 
COVID-19
Economic loss
Containment policy
Variance of policy effects
Agent-based modeling
JEL: 
C63
E17
H12
I18
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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