Social distancing strategies for curbing the COVID-19 epidemic. Stephen M Kissler, View ORCID ProfileChristine Tedijanto, Marc Lipsitch, Yonatan Grad. medRxiv, Mar 24 2020. https://doi.org/10.1101/2020.03.22.20041079
Abstract: The SARS-CoV-2 pandemic is straining healthcare resources worldwide, prompting social distancing measures to reduce transmission intensity. The amount of social distancing needed to curb the SARS-CoV-2 epidemic in the context of seasonally varying transmission remains unclear. Using a mathematical model, we assessed that one-time interventions will be insufficient to maintain COVID-19 prevalence within the critical care capacity of the United States. Seasonal variation in transmission will facilitate epidemic control during the summer months but could lead to an intense resurgence in the autumn. Intermittent distancing measures can maintain control of the epidemic, but without other interventions, these measures may be necessary into 2022. Increasing critical care capacity could reduce the duration of the SARS-CoV-2 epidemic while ensuring that critically ill patients receive appropriate care.
Friday, March 27, 2020
Significant macroeconomic after-effects of the pandemics persist for about 40 years, with real rates of return substantially depressed; in contrast, we find that wars have no such effect, indeed the opposite
Longer-run economic consequences of pandemics? Oscar Jorda, Sanjay R. Singh, Alan M. Taylor. Univ of California at Davis, March 2020. http://ssingh.ucdavis.edu/uploads/1/2/3/2/123250431/pandemics_jst_mar2020_.pdf
Abstract: How do major pandemics affect economic activity in the medium to longer term? Is it consistent with what economic theory prescribes? Since these are rare events, historical evidence over many centuries is required. We study rates of return on assets using a dataset stretching back to the 14th century, focusing on 12 major pandemics where more than 100,000 people died. In addition, we include major armed conflicts resulting in a similarly large death toll. Significant macroeconomic after-effects of the pandemics persist for about 40 years, with real rates of return substantially depressed. In contrast, we find that wars have no such effect, indeed the opposite. This is consistent with the destruction of capital that happens in wars, but not in pandemics. Using more sparse data, we find real wages somewhat elevated following pandemics. The findings are consistent with pandemics inducing labor scarcity and/or a shift to greater precautionary savings.
Keywords: pandemics, wars, depressions, real interest rate, natural rate, local projections.
JEL classification codes: E43, F41, N10, N30, N40.
7. Conclusions
Summing up our findings, the great historical pandemics of the last millennium have typically been associated with subsequent low returns to assets, as far as the limited data allow us to conclude. These responses are huge. Smaller responses are found in real wages, but still statistically significant, and consistent with the baseline neoclassical model.
Measured by deviations in a benchmark economic statistic, the real natural rate of interest, these responses indicate that pandemics are followed by sustained periods—over multiple decades—with depressed investment opportunities, possibly due to excess capital per unit of surviving labor, and/or heightened desires to save, possibly due to an increase in precautionary saving or a rebuilding of depleted wealth.
Either way, if the trends play out similarly in the wake of COVID-19—adjusted to the scale of this pandemic—the global economic trajectory will be very different than was expected only a few weeks ago. If low real interest rates are sustained for decades they will provide welcome fiscal space for governments to mitigate the consequences of the pandemic. The major caveat is that past pandemics occurred at time when virtually no members of society survived to old age. The Black Death and other plagues hit populations with the great mass of the age pyramid below 60, so this time may be different.
Abstract: How do major pandemics affect economic activity in the medium to longer term? Is it consistent with what economic theory prescribes? Since these are rare events, historical evidence over many centuries is required. We study rates of return on assets using a dataset stretching back to the 14th century, focusing on 12 major pandemics where more than 100,000 people died. In addition, we include major armed conflicts resulting in a similarly large death toll. Significant macroeconomic after-effects of the pandemics persist for about 40 years, with real rates of return substantially depressed. In contrast, we find that wars have no such effect, indeed the opposite. This is consistent with the destruction of capital that happens in wars, but not in pandemics. Using more sparse data, we find real wages somewhat elevated following pandemics. The findings are consistent with pandemics inducing labor scarcity and/or a shift to greater precautionary savings.
Keywords: pandemics, wars, depressions, real interest rate, natural rate, local projections.
JEL classification codes: E43, F41, N10, N30, N40.
7. Conclusions
Summing up our findings, the great historical pandemics of the last millennium have typically been associated with subsequent low returns to assets, as far as the limited data allow us to conclude. These responses are huge. Smaller responses are found in real wages, but still statistically significant, and consistent with the baseline neoclassical model.
Measured by deviations in a benchmark economic statistic, the real natural rate of interest, these responses indicate that pandemics are followed by sustained periods—over multiple decades—with depressed investment opportunities, possibly due to excess capital per unit of surviving labor, and/or heightened desires to save, possibly due to an increase in precautionary saving or a rebuilding of depleted wealth.
Either way, if the trends play out similarly in the wake of COVID-19—adjusted to the scale of this pandemic—the global economic trajectory will be very different than was expected only a few weeks ago. If low real interest rates are sustained for decades they will provide welcome fiscal space for governments to mitigate the consequences of the pandemic. The major caveat is that past pandemics occurred at time when virtually no members of society survived to old age. The Black Death and other plagues hit populations with the great mass of the age pyramid below 60, so this time may be different.
Subscribe to:
Posts (Atom)
Posts
