Research Details

Abstract

We develop a SIR-based macroeconomic model to study the impact of testing/ quarantining and social distancing/mask use on health and economic outcomes. These policies can dramatically reduce the costs of an epidemic. Absent testing/quarantining, the main effect of social distancing and mask use on health outcomes is to delay, rather than reduce, epidemic-related deaths. Social distancing and mask use reduce the severity of the epidemic-related recession but prolong its duration. There is an important synergy between social distancing and mask use and testing/quarantining. Social distancing and mask use buy time for testing and quarantining to come to the rescue. The benefits of testing/quarantining are even larger when people can get reinfected, either because the virus mutates or immunity is temporary.

Type

Article

Author(s)

Sergio Rebelo, Martin S. Eichenbaum, Mathias Trabandt

Date Published

2022

Citations

Rebelo, Sergio, Martin S. Eichenbaum, and Mathias Trabandt. 2022. The Macroeconomics of Testing and Quarantining. Journal of Economic Dynamics and Control.