Abstract
This paper constructs a partial equilibrium model under public health emergency shocks based on economic growth theory, and investigates the relationship between government intervention and virus transmission and economic growth path. We found that both close contacts tracing measures and isolation measures are beneficial to human capital stock and economic output per capita, and the effect of close contact tracing measures is better than that of isolation measures. For infectious diseases of different intensities, economic growth pathways differed across interventions. For low contagious public health emergencies, the focus should be on the coordination of isolation and tracing measures. For highly contagious public health emergencies, strict isolation, and tracing measures have limited effect in repairing the negative economic impact of the outbreak. The theoretical model provides a basic paradigm for the future researches to study economic growth under health emergencies, with good scalability and robustness.
Highlights
At present, the global economy is still in the shadow of COVID-19
We construct a theoretical model to explore the effects of isolation of infected persons and tracing of close contacts on the spread of the epidemic and its impact on economic growth, in order to find the path of economic growth and the government’s epidemic prevention plan under the emergency
The results show that the epidemic has restricted labor and production capacity, it has a positive effect on economic recovery under government intervention policies
Summary
The global economy is still in the shadow of COVID-19. In this unprecedented global public health emergency, the economies of many countries are in recession. Since the outbreak of COVID-19, the global response to the epidemic and the differences in economic performance provide a window for us to observe the effectiveness of epidemic prevention measures and economic growth. We construct a theoretical model to explore the effects of isolation of infected persons and tracing of close contacts on the spread of the epidemic and its impact on economic growth, in order to find the path of economic growth and the government’s epidemic prevention plan under the emergency. This paper finds that epidemic prevention measures have positive effects on economic recovery. The paths of economic growth under epidemic prevention measures differ for different intensities of infectious diseases. Epidemic Prevention and Growth Path attention should be paid to the coordination of isolation and tracking measures. We simulate the epidemic prevention effects and economic effects of isolation measures and tracing measures which commonly used by governments under an epidemic, weighing the optimal policy combinations on the two issues of epidemic prevention and economic growth
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