What Will be the Economic Impact of COVID-19? Rough Estimates of Disease Scenarios

By Andrew Atkeson. 2020

695 citations recorded by the source corpus.

This note is intended to introduce economists to a simple SIR model of the progression of COVID-19 in the United States over the next 12-18 months. An SIR model is a Markov model of the spread of an epidemic in a population in which the total population is divided into categories of being susceptible to the disease (S), actively infected with the disease (I), and recovered (or dead) and no longer contagious (R). How an epidemic plays out over time is determined by the transition rates between these three states. This model allows for quantitative statements regarding the tradeoff between the severity and timing of suppression of the disease through social distancing and the progression of the disease in the population. Example applications of the model are provided. Special attention is given to the question of if and when the fraction of active infections in the population exceeds 1% (at which point the health system is forecast to be severely challenged) and 10% (which may result in severe staffing shortages for key financial and economic infrastructure) as well as the cumulative burden of the disease over an 18 month horizon.

Subfields: Economics and Econometrics, Modeling and Simulation, Soil Science

View Paper: https://www.semanticscholar.org/paper/36babf7dea57a4dd73cc77f76d61018711b7e829

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Citations in the corpus

Optimal Mitigation Policies in a Pandemic: Social Distancing and Working from Home (2020, methodology): “For an early discussion of the challenges, see Atkeson (2020a).”
COVID-19 and the Digital Transformation of Education: What Are We Learning on 4IR in South Africa? (2020, background): “Atkeson [22], in the study “What Will Be the economic impact of COVID-19 in the US?”, introduced a simple SIR model to economists on progression of COVID-19 in the United States over the next 12–18 months.”
The Impact of the COVID-19 Pandemic on Consumption: Learning from High-Frequency Transaction Data (2020, methodology): “Atkeson (2020) introduces an SIR model of the COVID-19 progression in the US in the next 12-18 months.”
Unemployment Effects of Stay-at-Home Orders: Evidence from High-Frequency Claims Data (2020, background): “Gourinchas (2020) and Atkeson (2020) are early summaries of how the public health crisis and associated policy interventions interact with the economy.”
Economic and social consequences of human mobility restrictions under COVID-19 (2020, background): “Supply shocks can, in fact, trigger variations in aggregate demand that ultimately can be even larger than the COVID-related shocks themselves, hence imposing to immediately incorporating principles of system resilience to systemic disruption in order not to condition the future socio-economic recov”
Leveraging Data Science to Combat COVID-19: A Comprehensive Review (2020, background): “Social distancing measures are also having a major impact on the global economy [102], [103].”
Sectoral Effects of Social Distancing (2020, background): “Atkeson, A. (2020). What will be the economic impact of covid-19 in the us? rough estimates of disease scenarios. NBER Working Paper . Baqaee, D. R. and E. Farhi (2019). Networks, barriers, and trade. Working Paper . Barro, R., J. F. Ursua, and J. Weng (2020). The coronavirus and the great influenza”
Firm-Level Exposure to Epidemic Diseases: Covid-19, SARS, and H1N1 (2020, neutral): “5 negative shock to the growth rate in productivity) and Faria-e Castro (2020) (modeling the pandemic as a large negative shock to the utility of consumption).4 In finance, several studies highlight the credit market access and liquidity consequences of the Covid-19 pandemic (Au et al. (2020); Ferra”
Neural Networks Fail to Learn Periodic Functions and How to Fix It (2020, methodology): “For training, we take the daily data from 1995-1-1 to 2020-1-31, around 6300 points in total, the ending time is deliberately chosen such that it is before the COVID19 starts to affect the global economy [3, 11].”
COVID-19 pandemic and economic crisis: the Nigerian experience and structural causes (2020, background): “A recent literature has emerged that examine the effect of COVID-19 on economic activities (Fernandes, 2020; Atkeson, 2020; McKibbin and Fernando, 2020; Altig et al, 2020; Ozili and Arun, 2020).”