Attention Economy


Wednesday, April 1, 2020

Pandemics - History Lessons

Pandemics and the Shape of Human History

Lessons from the Spanish flu: social distancing can be good for the economy
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.


Cutting GDP to Counter the Coronavirus Pandemic by Robert Barro
THE CORONAVIRUS AND THE GREAT INFLUENZA PANDEMIC: LESSONS FROM THE “SPANISH FLU” FOR THE CORONAVIRUS’S POTENTIAL EFFECTS ON MORTALITY AND ECONOMIC ACTIVITY
https://www.nber.org/papers/w26866.pdf

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