A Simple Planning Problem for COVID-19 Lockdown

26 Pages Posted: 8 May 2020

See all articles by Fernando Alvarez

Fernando Alvarez

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

David Argente

Pennsylvania State University

Francesco Lippi

LUISS university; Einaudi Institute for Economics and Finance (EIEF); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: April 2020

Abstract

We study the optimal lockdown policy for a planner who controls the fatalities of a pandemic while minimizing the output costs of the lockdown. The policy depends on the fraction of infected and susceptible in the population, prescribing a severe lockdown beginning two weeks after the outbreak, covering 60% of the population after a month, and gradually withdrawing to 20% of the population after 3 months. The intensity of the optimal lockdown depends on the gradient of the fatality rate with respect to the infected, and the availability of antibody testing that yields a welfare gain of 2% of GDP.

Keywords: Dynamic programming, epidemic control, lockdown, Quarantine

JEL Classification: C61, I10, I18

Suggested Citation

Alvarez, Fernando and Argente, David and Lippi, Francesco, A Simple Planning Problem for COVID-19 Lockdown (April 2020). CEPR Discussion Paper No. DP14658, Available at SSRN: https://ssrn.com/abstract=3594290

Fernando Alvarez (Contact Author)

University of Chicago - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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David Argente

Pennsylvania State University ( email )

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Francesco Lippi

LUISS university ( email )

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Rome, 00161
Italy

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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