Goenka, Aditya, Liu, Lin and Nguyen, Manh-Hung (2022) Modelling optimal lockdowns with waning immunity. Economic Theory.

Abstract

This paper studies continuing optimal lockdowns (can also be interpreted as quaran-tines or self-isolation) in the long run if a disease (Covid-19) is endemic and immunity can fail, that is, the disease has SIRS dynamics. We model how disease related mortality affects the optimal choices in a dynamic general equilibrium neoclassical growth framework. An extended welfare function that incorporates loss from mortality is used. In a disease endemic steady state, without this welfare loss even if there is continu-ing mortality, it is not optimal to impose even a partial lockdown. We characterize how the optimal restriction and equilibrium outcomes vary with the effectiveness of the lockdown, the productivity of working from home, the rate of mortality from the disease, and failure of immunity. We provide the sufficiency conditions for economic models with SIRS dynamics with disease related mortality – a class of models which are non-convex and have endogenous discounting so that no existing results are applicable.

Available Versions of this Item

• Modeling optimal quarantines with waning immunity. (deposited 06 May 2021 15:35)
  • Modelling optimal lockdowns with waning immunity. (deposited 27 Feb 2023 15:51) [Currently Displayed]