COVID-19 Crisis Management in Luxembourg: Insights from an Epidemionomic Approach

Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2020-08

52 Pages Posted: 20 Jul 2020

See all articles by Michał Burzyński

Michał Burzyński

Luxembourg Institute of Socio-Economic Research (LISER)

Joel Machado

Luxembourg Institute of Socio-Economic Research (LISER); Universite du Luxembourg - Faculty of Law, Economics and Finance

Atte Aalto

Universite du Luxembourg

Michel A. R. Beine

University of Luxemburg; CESifo (Center for Economic Studies and Ifo Institute)

Jorge Goncalves

University of Luxembourg

Tom Haas

STATEC

Francoise Kemp

Universite du Luxembourg

Stefano Magni

Universite du Luxembourg

Laurent Mombaerts

Universite du Luxembourg

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg

Daniele Proverbio

Universite du Luxembourg

Alexander Skupin

Universite du Luxembourg - Luxembourg Centre for Systems Biomedicine

Frédéric Docquier

Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Date Written: June 25, 2020

Abstract

We develop an epidemionomic model that jointly analyzes the health and economic responses to the COVID-19 crisis and to the related containment and public health policy measures implemented in Luxembourg and in the Greater Region. The model has a weekly structure and covers the whole year 2020. With a limited number of parameters, the model is calibrated to depict the pre-crisis evolution of the Luxembourg economy, and to match post-lockdown leading economic indicators and industry-specific infection curves. The nowcasting part of our analysis reveals that each week of lockdown reduces national output by about 28% (and annual GDP by 0.54%). A first peak of the infection curve was observed at the very beginning of April. If the lockdown measures had been permanent, annual GDP would have decreased by 22% in 2020, the number of COVID-19 cases would have reached zero around mid-June, and the proportion of recovered people would have reached 1.4% of the population. In an economy heavily relying on skill-intensive services, we show that the role of teleworking has been instrumental to limiting the weekly economic output loss (almost by one half) and the propagation of the virus. In the forecasting part of the analysis, we quantify the epidemiological and economic responses to gradual deconfinement measures under various public health scenarios. If the post-lockdown transmission rates could be kept constant throughout the deconfinement period, restarting all sectors would have huge effects on the economy (limiting the annual GDP loss to about 7%) and no effect on the aggregate infection curve. While it is a good time for lifting containment measures, there is also a risk that increasing the density of employees at the workplace and resuming social activities would induce a rebound in the infection curve. Preventing such a relapse is possible with PCR testing of both national and cross-border workers, and with accompanying measures such as (i) maintaining teleworking practices, (ii) reopening hotels, restaurants and cafés at half of their full capacity or with equivalent physical distancing measures and last but not least, (iii) sustaining distancing measures in social activities. Overall, in our worst-case scenario, combining bi-monthly testing with contact tracing and quarantining measures appear to be a sufficient (perhaps not necessary) policy option in the aftermath of the deconfinement plan.

Note: Funding: None to declare

Declaration of Interest: None to declare

Keywords: COVID-19, epidemionomic model, health, Luxembourg, Greater Region

Suggested Citation

Burzyński, Michał and Machado, Joel and Aalto, Atte and Beine, Michel A. R. and Goncalves, Jorge and Haas, Tom and Kemp, Francoise and Magni, Stefano and Mombaerts, Laurent and Picard, Pierre M. and Proverbio, Daniele and Skupin, Alexander and Docquier, Frédéric, COVID-19 Crisis Management in Luxembourg: Insights from an Epidemionomic Approach (June 25, 2020). Luxembourg Institute of Socio-Economic Research (LISER) Working Paper Series 2020-08, Available at SSRN: https://ssrn.com/abstract=3651024 or http://dx.doi.org/10.2139/ssrn.3651024

Michał Burzyński (Contact Author)

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

Maison des Sciences Humaines
11, Porte des Science
Esch-sur-Alzette/Belval, L-4366
Luxembourg

HOME PAGE: http://https://sites.google.com/site/mpburzynski/

Joel Machado

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

162a, avenue de la Faïencerie
Luxembourg-Limpertsberg, L-1511
Luxembourg

Atte Aalto

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Michel A. R. Beine

University of Luxemburg ( email )

L-1511 Luxembourg
Luxembourg

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jorge Goncalves

University of Luxembourg ( email )

6, avenue du Swing
Belvaux, 4367
Luxembourg

Tom Haas

STATEC ( email )

BP 304
Luxembourg City, L-2013
Luxembourg

Francoise Kemp

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Stefano Magni

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Laurent Mombaerts

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Pierre M. Picard

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Universite du Luxembourg

L-1511 Luxembourg
Luxembourg

Daniele Proverbio

Universite du Luxembourg ( email )

L-1511 Luxembourg
Luxembourg

Alexander Skupin

Universite du Luxembourg - Luxembourg Centre for Systems Biomedicine

2 Avenue de l'Université
Esch-sur-Alzette
Luxembourg

Frédéric Docquier

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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