Pandemics and the Shape of Human History
Pandemics Depress the Economy, Public Health
Interventions Do Not: Evidence from the 1918 Flu
Abstract
What are the economic consequences of an influenza
pandemic? And given the pandemic, what are the economic costs and benefits of
non-pharmaceutical interventions (NPI)? Using geographic variation in mortality
during the 1918 Flu Pandemic in the U.S., we find that more exposed areas
experience a sharp and persistent decline in economic activity. The estimates
imply that the pandemic reduced manufacturing output by 18%. The downturn is
driven by both supply and demand-side channels. Further, building on findings
from the epidemiology literature establishing that NPIs decrease influenza
mortality, we use variation in the timing and intensity of NPIs across U.S.
cities to study their economic effects. We find that cities that intervened
earlier and more aggressively do not perform worse and, if anything, grow
faster after the pandemic is over. Our findings thus indicate that NPIs not
only lower mortality; they also mitigate the adverse economic consequences of a
pandemic.
THE CORONAVIRUS AND THE GREAT INFLUENZA PANDEMIC:
LESSONS FROM THE “SPANISH FLU” FOR THE CORONAVIRUS’S POTENTIAL EFFECTS ON
MORTALITY AND ECONOMIC ACTIVITY
Cutting GDP to Counter the Coronavirus Pandemic by Robert
Barro
https://www.nber.org/papers/w26866.pdf
The Macroeconomics of Epidemics by Martin S. Eichenbaum, Sergio Rebelo, Mathias Trabandt
https://www.nber.org/papers/w26882.pdf
We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic. The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark scenario, the optimal containment policy increases the severity of the recession but saves roughly 0.6 million lives in the U.S.
American Experience Documentary
Related:
Social Distancing During the Black Death
The Macroeconomics of Epidemics by Martin S. Eichenbaum, Sergio Rebelo, Mathias Trabandt
https://www.nber.org/papers/w26882.pdf
We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic. The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark scenario, the optimal containment policy increases the severity of the recession but saves roughly 0.6 million lives in the U.S.
American Experience Documentary