C19 Health Economics Literature

We measure the economic risk of Covid-19 at a geo-spatially detailed resolution. In addition to data about the current prevalence of confirmed cases, we use data from 2014-2018 to compute measures for exposure, vulnerability, and resilience of the local economy to the shock of the epidemic. Using a battery of proxies for these four concepts, we calculate the hazard and the principal components of exposure and vulnerability to it, and of the economy’s resilience (i.e., its ability to recover rapidly from the shock). We find that the economic risk of this pandemic is particularly high in most of Africa, the Indian subcontinent, the Persian Gulf, and Southeast Asia. These results are consistent when comparing an ad hoc equal weighting algorithm for the four components of the index, an algorithm that assumes equal hazard for all countries, and one based on an estimated weights using...

We apply the SIR-macro model proposed by Eichenbaum et al. (2020) in its complete version to comparatively study the interaction between economic decisions and COVID-19 epidemics in five different Brazilian states: São Paulo (SP), Amazonas (AM), Ceará (CE), Rio de Janeiro (RJ) and Pernambuco (PE). Our objective is to analyze qualitatively how the main intrinsic differences of each of these states can affect the epidemic dynamics and its consequences. For this purpose, we compute and compare the model for each of the states, both in competitive equilibrium and under optimal containment policy adoption, and analyze the implications of optimal policy adoption. We conclude that the intrinsic characteristics of the five different states imply relevant differences in the general dynamics of the epidemic, in the optimal containment policies, in the effect of the adoption of these policies...

I study the demand for health insurance during the COVID-19 pandemic using Special Enrollment Period (SEP) individual-level enrollment data from the Washington State Affordable Care Act Marketplace. I document that most individuals enrolling in plans during the pandemic are those who lost minimum essential coverage, followed by uninsured individuals making use of Washington’s limited-time SEP for uninsured individuals. I estimate a demand model and find that low-income individuals and young individuals are more premium sensitive. I find that 20.4 percent of the individuals in my analysis sample did not pay their initial premium. Individuals losing minimum essential coverage are less likely to pay their initial premium than individuals using the SEP for other qualifying events. Lower income individuals are less likely to pay the initial premium than higher income individuals. My...

The COVID-19 crisis has led to substantial reductions in earnings. We propose a new measure of financial vulnerability, computable through survey data, to determine whether households can withstand a certain income shock for a defined period of time. Using data from the ECB Household Finance and Consumption Survey (HFCS) we analyse pre-existing financial vulnerability in seven EU countries. We find that income support is essential for many families: 47.2 million individuals, out of the 243 million considered, cannot afford three months of food and housing expenses without privately earned income. Differences across countries are stark, and those born outside of the EU are especially vulnerable. Through a tax-benefit microsimulation exercise, we then derive household net income when employees are laid-off and awarded the COVID-19 employment protection benefits enacted in the different...

We build a publicly available database that tracks economic activity at a granular level in real time using anonymized data from private companies. We report daily statistics on consumer spending, business revenues, employment rates, and other key indicators disaggregated by ZIP code, industry, income group, and business size. Using these data, we study how COVID-19 affected the economy by analyzing heterogeneity in its impacts. We first show that high-income individuals reduced spending sharply in mid-March 2020, particularly in areas with high rates of COVID-19 infection and in sectors that require in-person interaction. This reduction in spending greatly reduced the revenues of small businesses in affluent ZIP codes. These businesses laid off many of their employees, leading to widespread job losses especially among low-wage workers in affluent areas. High-wage workers experienced...

In this paper we argue that endogenous shifts in private consumption behaviour across sectors of the economy can act as a potent mitigation mechanism during an epidemic or when the economy is re-opened after a temporary lockdown. Extending the theoretical framework proposed by Eichenbaum-Rebelo-Trabandt (2020), we distinguish goods by the degree to which they can be consumed at home rather than in a social (and thus possibly contagious) context. We demonstrate that, within the model the “Swedish solution” of letting the epidemic play out without government intervention and allowing agents to shift their sectoral behavior on their own can lead to a substantial mitigation of the economic and human costs of the Covid-19 crisis, avoiding more than 80% of the decline in output and of number of deaths within one year, compared to a model in which sectors are assumed to be homogeneous. For...

We develop an econometric model of consumer panic (or panic buying) during the COVID-19 pandemic. Using Google search data on relevant keywords, we construct a daily index of consumer panic for 54 countries from January to late April 2020. We also assemble data on government policy announcements and daily COVID-19 cases for all countries. Our panic index reveals widespread consumer panic in most countries, primarily during March, but with significant variation in the timing and severity of panic between countries. Our model implies that both domestic and world virus transmission contribute significantly to consumer panic. But government policy is also important: Internal movement restrictions – whether announced by domestic or foreign governments – generate substantial short run panic that largely vanishes in a week to ten days. Internal movement restrictions announced early in the...

We measure the effect of lockdown policies on employment and GDP across countries using individual- and sector-level data. Employment effects depend on the ability to work from home, which ranges from about half of total employment in rich countries to around 35% in poor countries. This gap reflects differences in occupational composition, self-employment levels, and individual characteristics across countries. GDP effects of lockdown policies also depend on countries’ sectoral structure. Losses in poor countries are attenuated by their higher value-added share in essential sectors, notably agriculture. Overall, a realistic lockdown policy implies GDP losses of 20-25% on an annualized basis.

We study the effects of international supply chain disruptions on real economic activity and prices during the Covid-19 pandemic. We show that US sectors with a large exposure to intermediate goods imports from China contracted significantly and robustly more than other sectors. In particular, highly exposed sectors suffered larger declines in production, employment, imports, and exports. Moreover, input and output prices moved up relative to other sectors, suggesting that real activity declines in sectors with a high China exposure were not particularly driven by a slump in demand. Quantitatively, differences in China exposures accounts for about 9% of the cross-sectoral variance of industrial production growth during March and April 2020. The estimated effects are short-lived effects and dissipate by July.

We analyse the short-term impact of social distancing measures on the US labour market, using a panel threshold model with high frequency (weekly) data on unemployment across US states. We find that changes in the restrictiveness of mandated social distancing, as measured by the Oxford Stringency Index, exert a strong immediate impact on initial unemployment. The unemployment rate is not immediate affected but follows within a very short time (two to four weeks). We also document a substantial asymmetry between tightening and easing: the impact of tightening restrictions is twice as large as that of easing them. The state of the endemic, proxied either by cases or fatalities, constitutes a marginal factor.