Martin Eichenbaum, Sérgio Rebelo, Mathias Trabandt, 20 July 2020

Traditional epidemiology models generally don’t allow for interactions between peoples’ economic decisions and rates of infection, limiting their usefulness for forecasting and policy analysis. This column introduces a framework for combining economics and epidemiology in a way that allows for these interactions and uses the model to address the challenge of designing and implementing policies that improve the trade-off between economic and health outcomes during an epidemic. The results suggest that testing and quarantine policies should play a central role in minimising the social costs of the COVID-19 crisis. 

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