Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

51 Pages Posted: 31 Aug 2020 Last revised: 27 Jun 2021

See all articles by David E. Bloom

David E. Bloom

Harvard University - T.H. Chan School of Public Health; National Bureau of Economic Research (NBER)

Michael Kuhn

Wittgenstein Centre for Demography and Global Human Capital; University of Vienna - Vienna Institute of Demography

Klaus Prettner

Institute of Economics; University of Goettingen (Göttingen); University of Vienna - Austrian Academy of Sciences; Vienna University of Technology - Institute for Mathematical Methods in Economics

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Date Written: August 2020

Abstract

We discuss and review literature on the macroeconomic effects of epidemics and pandemics since the late 20th century. First, we cover the role of health in driving economic growth and well-being and discuss standard frameworks for assessing the economic burden of infectious diseases. Second, we sketch a general theoretical framework to evaluate the tradeoffs policymakers must consider when addressing infectious diseases and their macroeconomic repercussions. In so doing, we emphasize the dependence of economic consequences on (i) disease characteristics; (ii) inequalities among individuals in terms of susceptibility, preferences, and income; and (iii) cross-country heterogeneities in terms of their institutional and macroeconomic environments. Third, we study pharmaceutical and nonpharmaceutical policies aimed at mitigating and preventing infectious diseases and their macroeconomic repercussions. Fourth, we discuss the health toll and economic impacts of five infectious diseases: HIV/AIDS, malaria, tuberculosis, influenza, and COVID-19. Although major epidemics and pandemics can take an enormous human toll and impose a staggering economic burden, early and targeted health and economic policy interventions can often mitigate both to a substantial degree.

Suggested Citation

Bloom, David E. and Kuhn, Michael and Prettner, Klaus, Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses (August 2020). NBER Working Paper No. w27757, Available at SSRN: https://ssrn.com/abstract=3683641

David E. Bloom (Contact Author)

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Michael Kuhn

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Klaus Prettner

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Vienna University of Technology - Institute for Mathematical Methods in Economics ( email )

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