Publication Type

Working Paper

Version

publishedVersion

Publication Date

10-2020

Abstract

This paper studies optimal containment policy for combating a pandemic in an open-economy context. It does so via quantitative analyses using a model that incorporates a standard epidemiological compartmental model in a multi-country, multi-sector Ricardian model of international trade with full-fledged input-output linkages. We devise a novel approach in computing optimal national policies in the long run, and contrast these policies with a baseline in which countries maintain their current policies until vaccine availability. The welfare gains under optimal policies are asymmetric as the gains for the set of countries which should tighten up the containment measures are much larger than those which should relax. We also find that the welfare implications of optimal policies in open economies differ significantly from those in closed ones.

Keywords

COVID-19, pandemic, welfare analysis, containment policy, optimal policy, open economy, trade, input-output linkages

Discipline

International Economics | Public Health | Work, Economy and Organizations

Research Areas

Applied Microeconomics

First Page

1

Last Page

40

Publisher

SMU Economics and Statistics Working Paper Series, Paper No. 20-2020

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