On the Economic Benefits and Costs of COVID-19 Mitigation Measures in Mexico
29 Pages Posted: 4 May 2020 Last revised: 5 May 2020
Date Written: May 4, 2020
In this paper I calculate the daily flows of COVID-19 cases under the current scenario of recommended social distance and restricted economic activity, and under a counterfactual uncontrolled scenario with no mitigation measures. Using official sources, I quantify the supply of hospital beds and ICUs to project the fatality of cases under both scenarios. I estimate that social distance will reduce the number of COVID-19 cases in 65%. The benefits of mitigation measures amount to a reduction of over 119,000 direct fatalities and about 121,000 deaths due to healthcare system overflow. The benefits of these measures are monetized as 697 billion USD. I estimate that the net cost of mitigation in terms of output gap over a 60-months recovery period represents 29% of 2019 Mexico's GDP. This cost would be reduced if a faster recovery occurs or if the government stimulates the economy enough to reduce output gap between the mitigation scenario and the uncontrolled scenario, making a case for an active role of fiscal policies.
Keywords: COVID-19, cost-benefit, epidemic, Mexico
JEL Classification: H12, D16, H42
Suggested Citation: Suggested Citation