Abstract

This paper studies containment policies 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 general equilibrium multi-country, multi-sector Ricardian model of international trade with input–output linkages. We quantitatively evaluate the long-run welfare and real-income losses due to the short-run pandemic shocks, and we study the role of trade in these effects. We devise a novel approach to computing national optimal policies. We find that (1) the long-run welfare and real-income losses due to just two years of pandemic shocks are substantial; (2) international trade helps buffer both the welfare and real-income losses, and it also saves lives; (3) the computed optimal policies indicate that most countries should have tightened their containment measures relative to what was done; and (4) compared to the case of autarky, the optimal policy under trade is generally more stringent.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.