Social distancing and supply disruptions in a pandemic
Authors
Bodenstein, Martin
Corsetti, Giancarlo
Guerrieri, Luca
Publication Date
2022-05-25Journal Title
Quantitative Economics
ISSN
1759-7323
Publisher
The Econometric Society
Volume
13
Issue
2
Pages
681-721
Language
en
Type
Article
This Version
AO
VoR
Metadata
Show full item recordCitation
Bodenstein, M., Corsetti, G., & Guerrieri, L. (2022). Social distancing and supply disruptions in a pandemic. Quantitative Economics, 13 (2), 681-721. https://doi.org/10.3982/qe1618
Abstract
<jats:p>We integrate an epidemiological model, augmented with contact and mobility analyses, with a two‐sector macroeconomic model, to assess the economic costs of labor supply disruptions in a pandemic. The model is designed to capture key characteristics of the U.S. input–output tables with a core sector that produces intermediate inputs not easily replaceable by the other sectors, possibly subject to minimum‐scale requirements. Using epidemiological and mobility data to inform our exercises, we show that the reduction in labor services due to the observed social distancing (spontaneous and mandatory) could explain up to 6–8 percentage points of the roughly 12% U.S. GDP contraction in the second quarter of 2020. We show that public measures designed to protect workers in core industries and occupations with tasks that cannot be performed from home, can flatten the epidemiological curve at reduced economic costs—and contain vulnerabilities to supply disruptions, namely a new surge of infections. Using state‐level data for the United States, we provide econometric evidence that spontaneous social distancing was no less costly than mandated social distancing.</jats:p>
Keywords
Original Articles, Infectious disease, pandemic, recession, COVID‐19, E1, E3, I1
Identifiers
quan200206
External DOI: https://doi.org/10.3982/qe1618
This record's URL: https://www.repository.cam.ac.uk/handle/1810/337463
Rights
Licence:
http://creativecommons.org/licenses/by-nc/4.0/
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