Mobility decisions, economic dynamics and epidemic

DOI10.1007/S00199-023-01485-1arXiv2107.01746OpenAlexW3186751769MaRDI QIDQ6131949FDOQ6131949

Authors:

Publication date: 18 April 2024

Published in: Economic Theory (Search for Journal in Brave)

Abstract: In this paper we propose a theoretical model including a susceptible-infected-recovered-dead (SIRD) model of epidemic in a dynamic macroeconomic general equilibrium framework with agents' mobility. The latter affect both their income (and consumption) and their probability of infecting and of being infected. Strategic complementarities among individual mobility choices drive the evolution of aggregate economic activity, while infection externalities caused by individual mobility affect disease diffusion. Rational expectations of forward looking agents on the dynamics of aggregate mobility and epidemic determine individual mobility decisions. The model allows to evaluate alternative scenarios of mobility restrictions, especially policies dependent on the state of epidemic. We prove the existence of an equilibrium and provide a recursive construction method for finding equilibrium(a), which also guides our numerical investigations. We calibrate the model by using Italian experience on COVID-19 epidemic in the period February 2020 - May 2021. We discuss how our economic SIRD (ESIRD) model produces a substantially different dynamics of economy and epidemic with respect to a SIRD model with constant agents' mobility. Finally, by numerical explorations we illustrate how the model can be used to design an efficient policy of state-of-epidemic-dependent mobility restrictions, which mitigates the epidemic peaks stressing health system, and allows for trading-off the economic losses due to reduced mobility with the lower death rate due to the lower spread of epidemic.

Full work available at URL: https://arxiv.org/abs/2107.01746

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zbMATH Keywords

COVID-19strategic complementaritiesmean field gameESIRD

Mathematics Subject Classification ID

Epidemiology (92D30) Applications of game theory (91A80) Economic dynamics (91B55) Mean field games (aspects of game theory) (91A16)

Cited In (3)

• Long-run belief-scarring effects of COVID-19 in a global economy
• A mean field game model for COVID-19 with human capital accumulation
• Covid-19 and mobility: determinant or consequence?

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