Intervention policy influence on the effect of epidemiological crisis on industry-level production through input–output networks

Abstract

During a global epidemiological crisis, lockdowns and border closures substantially disrupt international supply chains, underscoring the importance of choosing an intervention policy that accounts for the unique structure of input–output linkages among domestic industries. This study develops a pioneering mathematical model to quantify the role of pandemic-related intervention policies in the economic impact of a pandemic outbreak in an economy where sectors are complements throughout input–output networks. Our approach is based on three pillars — epidemiological, social, and economic sub-models. Moreover, we present in silico computer simulations to examine the influence of work capsules, work-from-home, vaccination, and industry closure on the damage a pandemic could inflict on output at the industry level. A comparison between work capsules and work-from-home policies shows that the latter decreases economic loss much more than the former. Compared to a state without interventions, a work-from-home policy affecting 12% of the workforce will decrease output loss by 1.4 percentage points during an epidemiological crisis following a COVID-19-like outbreak. Under the constraint of choosing one intervention policy, vaccination significantly reduces the loss of output, particularly in industries that require close customer–seller contacts. In the analysis of scenarios of integrating intervention policies, it is found that, using direct marginal contribution as the measure, the vaccination intervention is approximately 4.5 times more effective at reducing output loss than the work-from-home intervention.