Abstract
In the present paper, we attempt to find a way of preventing the spread of the new coronavirus without deteriorating the economy, by constructing an intertemporal model based on the dynamic optimization theory. More precisely, following the procedures used in dynamic optimization, we derive the optimal intertemporal path of the contact rate among the workers in an economy where the new coronavirus is spreading widely. It is revealed that under the optimal regulation, the workers should contact with other workers less and less at first, and then contact with other workers more and more until the contact rate reaches certain point.
Highlights
Since the outbreak of the new coronavirus, many attempts have been made to reveal empirically its impacts on various economic aspects such as consumption, stock market, uncertainty and so on (Barro, Ursua, & Weng, 2020; Baker, Bloom, Davis, Kost, Sammon, & Viratyosin, 2020; Baker, Farrokhnia, Meyer, Pagel, & Yannelis, 2020; Baker, Bloom, Davis, & Terry, 2020; Watanabe, 2020; and so on)
The question we pose is how we can prevent the spread of the new coronavirus without deteriorating the economy, by controlling the contact rate among workers
Fujita and reveal that the workers should contact with other workers less and less at first, and contact with other workers more and more until the contact rate reaches certain point
Summary
Since the outbreak of the new coronavirus, many attempts have been made to reveal empirically its impacts on various economic aspects such as consumption, stock market, uncertainty and so on (Barro, Ursua, & Weng, 2020; Baker, Bloom, Davis, Kost, Sammon, & Viratyosin, 2020; Baker, Farrokhnia, Meyer, Pagel, & Yannelis, 2020; Baker, Bloom, Davis, & Terry, 2020; Watanabe, 2020; and so on). In the present paper, based on these data analyses, we attempt to build the foundation of theoretical analysis of the new coronavirus problem by making use of the dynamic optimization theory whose masterpieces include Seierstad and Sydsaeter (1986), Kamien and Schwartz (1991) and Chiang (1992). The question we pose is how we can prevent the spread of the new coronavirus without deteriorating the economy, by controlling the contact rate among workers. We follow the standard procedures in the dynamic optimization theory.
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