Working Paper: NBER ID: w27104
Authors: Martin S. Eichenbaum; Sergio Rebelo; Mathias Trabandt
Abstract: We develop a SIR-based macroeconomic model to study the impact of testing/quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarantining, the main effect of social distancing and mask use on health outcomes is to delay, rather than reduce, epidemic-related deaths. Social distancing and mask use reduce the severity of the epidemic-related recession but prolong its duration. There is an important synergy between social distancing and mask use and testing/quarantining. Social distancing and mask use buy time for testing and quarantining to come to the rescue. The benefits of testing/quarantining are even larger when people can get reinfected, either because the virus mutates or immunity is temporary.
Keywords: Testing; Quarantining; Epidemic; Macroeconomic Model
JEL Codes: E1; H0; I1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social distancing and mask use (Z13) | delay epidemic-related deaths (I12) |
| social distancing and mask use (Z13) | overall deaths (I12) |
| testing/quarantining (C90) | overall deaths (I12) |
| social distancing and mask use + testing/quarantining (C90) | overall deaths (I12) |
| social distancing and mask use (Z13) | severity of epidemic-related recession (F44) |
| social distancing and mask use (Z13) | duration of recession (F44) |
| reinfection (Y60) | benefits of testing/quarantining (H12) |