Speaker: Mortaza Baky Haskuee, The Fields Institute

Date and Time: Wednesday, December 6, 2023 - 2:00pm to 3:00pm

Abstract

Since the beginning of the COVID-19 pandemic, governments around the world have been struggling with how to manage the pandemic. In early stages of the pandemic when there was no effective treatment and vaccine, non-pharmaceutical interventions (NPIs) such as school and non-essential business/activities closures, physical distancing, contact tracing were considered as the sole solution to controlling disease transmission. Evidence showed that complete and effective implementation of NPIs can reduce the number of infections and mortality. There are a range of tangible and intangible direct and indirect costs and benefits associated with public health interventions which can be realized in the short, medium, and long terms. While protection of lives is and should be the primary goal of public health interventions, one question that is frequently asked at various levels is whether the advantages of these measures justify the associated costs.

This research develops and calibrates a two layers macroeconomic model of pandemic to examine the costs and benefits of COVID-19 public health interventions. Integrating policies into a stratified SEIR model, this study analyzes the impacts of NPIs on disease transmission and applies a dynamic stochastic general equilibrium (DSGE) to simulate the impact of containment policy shocks to consumption, labor supply and production on macroeconomic variables. Our findings highlight the significant reduction in infections due to NPIs, but also acknowledge the negative economic consequences of policy shocks. However, the flexibility in the labor market and business adaptations help mitigate these negative impacts. The study emphasizes the need for a balanced approach in policy making, considering both public health and economic factors during pandemics.