COVID-19: erroneous modelling and its policy implications

Yinon Bar-On, Tatiana Baron, Ofer Cornfeld, Ron Milo, Eran Yashiv

Research in Economics on COVID-19 posits an economy subject to disease dynamics, which are often seriously misspecified in terms of speed and scale. Using a social planner problem, we show that such misspecifications lead to misguided policy. Erroneously characterizing a relatively slow-moving disease engenders dramatically higher death tolls and excessive output loss relative to the correct benchmark. We delineate the latter, employing epidemiological evidence on the timescales of COVID-19 transmission and clinical progression. The resulting sound model is simple, transparent, and novel in Economics.

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Year of publication:	March 2021
Authors:	Bar-On, Yinon ; Baron, Tatiana ; Cornfeld, Ofer ; Milo, Ron ; Yashiv, Eran
Publisher:	Bonn, Germany : IZA - Institute of Labor Economics
Subject:	optimal policy \| public health \| GDP loss \| COVID-19 \| disease dynamics and scale \| misspecification \| Coronavirus \| Gesundheitspolitik \| Health policy \| Infektionskrankheit \| Infectious disease \| Gesundheitswesen \| Health care system \| Wirkungsanalyse \| Impact assessment \| Epidemie \| Epidemic \| Krankheit \| Disease \| Theorie \| Theory