BIS - Dealing With Covid-19: Understanding The Policy Choices
BIS Bulletin | No 19 |
22 May 2020
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- Containment policies save lives but restrict economic activity. Standard approaches to accounting for the value of human lives lend support to these policies despite their high short-term economic costs.
- Integrated epidemic-macroeconomic models provide a coherent framework for quantifying the costs and benefits of containment policies. Part of the benefit comes from limiting externalities that would otherwise arise if social distancing were purely voluntary.
- Standard epidemiological and economic parameters suggest that several months of strict containment policies that lead to as much as a 30% decline in GDP for the period of the lockdown could be preferable to alternatives with more casualties and a less severe recession.
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