Reopening Scenarios

42 Pages Posted: 26 May 2020 Last revised: 15 Jun 2020

See all articles by David Baqaee

David Baqaee

London School of Economics and Political Science, Department of International Development, Students

Emmanuel Farhi

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

Michael Mina

affiliation not provided to SSRN

James H. Stock

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: May 2020

Abstract

We use a five-age epidemiological model, combined with 66-sector economic accounting, to address a variety of questions concerning the economic reopening. We calibrate/estimate the model using contact survey data and data on weekly historical individual actions and non-pharmaceutical interventions in the weeks ending March 8 – May 16, 2020. Going forward, we model a decision-maker (governor) as following reopening guidelines like those proposed by the White House and the CDC. The sectoral accounting, combined with information on personal proximity and ability to work from home by sector, make it possible to construct a GDP-to-Risk index of which sectors provide the greatest increment in GDP per marginal increase in R0. Through simulations, we find that: a strong economic reopening is possible; a “smart” reopening, preferencing some sectors over others, makes only modest improvements over a broad reopening; and all this hinges on retaining strong restrictions on non-work social contacts. If non-work contacts – going to bars, shopping without social distancing and masks, large group gatherings, etc. – return only half-way to the pre-COVID-19 baseline, the current decline in deaths reverses leading to a second wave of business closures.

Suggested Citation

Baqaee, David and Farhi, Emmanuel and Mina, Michael and Stock, James H., Reopening Scenarios (May 2020). NBER Working Paper No. w27244, Available at SSRN: https://ssrn.com/abstract=3609697

David Baqaee (Contact Author)

London School of Economics and Political Science, Department of International Development, Students ( email )

London
United Kingdom

HOME PAGE: http://sites.google.com/site/davidbaqaee/

Emmanuel Farhi

Harvard University - Department of Economics ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Michael Mina

affiliation not provided to SSRN

No Address Available

James H. Stock

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-496-0502 (Phone)
617-496-5960 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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