“Optimal Management of an Epidemic”

Carlos Garriga, Rody Manuelli and Siddhartha Sanghi study a dynamic macro model to capture the trade-off between policies that simultaneously decrease output and the rate of infection transmission. Findings suggest that, in many cases, optimal policies require sharp initial decreases in employment followed by a partial liberalization that occurs before the peak of the epidemic. The study also discusses the impact of the arrival of a vaccine and its changing value as the epidemic progresses.