Lockdown Policies: A Macrodynamic Perspective for COVID-19

20 Pages Posted: 13 Aug 2020

See all articles by Francesco Busato

Francesco Busato

University of Naples Parthenope

Bruno Chiarini

University of Naples, Parthenope

Gianluigi Cisco

affiliation not provided to SSRN

Maria Ferrara

Università degli Studi di Napoli “Parthenope”

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES)

Date Written: 2020

Abstract

The COVID-19 pandemic is producing a global health and economic crisis. The entire globe is facing the trade-off between health and recessionary effects. This paper investigates this trade-off according to a macro-dynamic perspective. We set up and simulate a Dynamic Stochastic General Equilibrium model to analyze the COVID-19 contagion within an economy with endogenous dynamics for the pandemic. There are three main results. First, the macroeconomic effects of the epidemic containment measures are much severe. The negative peak in aggregate production range from 11 percent with a soft containment measure to 35 percent with a strong containment measure; second, recovery from recession emerges when the lockdown policy is relaxed. On that basis, the output would return to its pre-lockdown level by the end of 2021; third, a return infection is expected after 36 weeks from the fist contagion contributing to exacerbates the size and duration of the economic crisis.

Keywords: business cycle, COVID-2019 pandemic, DSGE

JEL Classification: E320, I120

Suggested Citation

Busato, Francesco and Chiarini, Bruno and Cisco, Gianluigi and Ferrara, Maria and Marzano, Elisabetta, Lockdown Policies: A Macrodynamic Perspective for COVID-19 (2020). CESifo Working Paper No. 8465, Available at SSRN: https://ssrn.com/abstract=3671251

Francesco Busato (Contact Author)

University of Naples Parthenope ( email )

Via Medina 40
Via Generale Parisi, 13
Naples, 80133
Italy

Bruno Chiarini

University of Naples, Parthenope ( email )

Via Generale Parisi 13
Napoli, 80133
Italy

Gianluigi Cisco

affiliation not provided to SSRN

No Address Available

Maria Ferrara

Università degli Studi di Napoli “Parthenope” ( email )

Naples
Italy

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

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