TY - JOUR
T1 - Mortality containment vs. Economics Opening
T2 - Optimal policies in a SEIARD model
AU - Aspri, Andrea
AU - Beretta, Elena
AU - Gandolfi, Alberto
AU - Wasmer, Etienne
N1 - Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/3
Y1 - 2021/3
N2 - We extend the classic approach (SIR) to a SEAIRD model with policy controls. A social planner's objective reflects the trade-off between mortality reduction and GDP, featuring its perception of the value of statistical life (PVSL). We introduce realistic and drastic limitations to the control available to it. Within this setup, we explore the results of various control policies. We notably describe the joint dynamics of infection and economy in different contexts with unique or multiple confinement episodes. Compared to other approaches, our contributions are: (i) to restrict the class of functions accessible to the social planner, and in particular to impose that they remain constant over some fixed periods; (ii) to impose implementation frictions, e.g. a lag in their implementation; (iii) to prove the existence of optimal strategies within this set of possible controls; iv) to exhibit a sudden change in optimal policy as the statistical value of life is raised, from laissez-faire to a sizeable lockdown level, indicating a possible reason for conflicting policy proposals.
AB - We extend the classic approach (SIR) to a SEAIRD model with policy controls. A social planner's objective reflects the trade-off between mortality reduction and GDP, featuring its perception of the value of statistical life (PVSL). We introduce realistic and drastic limitations to the control available to it. Within this setup, we explore the results of various control policies. We notably describe the joint dynamics of infection and economy in different contexts with unique or multiple confinement episodes. Compared to other approaches, our contributions are: (i) to restrict the class of functions accessible to the social planner, and in particular to impose that they remain constant over some fixed periods; (ii) to impose implementation frictions, e.g. a lag in their implementation; (iii) to prove the existence of optimal strategies within this set of possible controls; iv) to exhibit a sudden change in optimal policy as the statistical value of life is raised, from laissez-faire to a sizeable lockdown level, indicating a possible reason for conflicting policy proposals.
KW - Optimal control
KW - Public policy evaluation
KW - SIR
KW - Statistical value of life
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U2 - 10.1016/j.jmateco.2021.102490
DO - 10.1016/j.jmateco.2021.102490
M3 - Article
AN - SCOPUS:85101374098
SN - 0304-4068
VL - 93
JO - Journal of Mathematical Economics
JF - Journal of Mathematical Economics
M1 - 102490
ER -