Tag Archives: Inverse lockdown

“A Tractable Model of Epidemic Control and Equilibrium Dynamics”, JEDC, 2025

With Martín Gonzalez-Eiras. Journal of Economic Dynamics and Control 178, 105145. September 2025. PDF, PDF of appendices C, D, E.

We develop a single-state model of epidemic control and equilibrium dynamics, and we show that its simplicity comes at very low cost during the early phase of an epidemic. Novel analytical results concern the continuity of the policy function; the reversal from lockdown to stimulus policies; and the relaxation of optimal lockdowns when testing is feasible. The model’s enhanced computational efficiency over SIR-based frameworks allows for the quantitative assessment of various new scenarios and specifications. Calibrated to reflect the COVID-19 pandemic, the model predicts an optimal initial activity reduction of 38 percent, with subsequent stimulus measures accounting for one-third of the welfare gains from optimal government intervention. The threat of recurrent infection waves makes the optimal lockdown more stringent, while a linear or near-linear activity-infection nexus, or strong consumption smoothing needs, reduce its stringency.

“The Pandemic Endgame,” VoxEU, 2021

VoxEU, January 11, 2021, with Martin Gonzalez-Eiras. HTML.

Based on the CEPR discussion paper, we draw conclusions for the pandemic endgame. We explain why Israel will likely impose a harsher lockdown than other countries, especially poor ones. And why we should expect “inverse lockdowns”—measures to stimulate social interaction.

“Optimally Controlling an Epidemic,” CEPR, 2020

CEPR Discussion Paper 15541, December 2020, with Martin Gonzalez-Eiras. PDF (local copy).

We propose a flexible model of infectious dynamics with a single endogenous state variable and economic choices. We characterize equilibrium, optimal outcomes, static and dynamic externalities, and prove the following: (i) A lockdown generically is followed by policies to stimulate activity. (ii) Re-infection risk lowers the activity level chosen by the government early on and, for small static externalities, implies too cautious equilibrium steady-state activity. (iii) When a cure arrives deterministically, optimal policy is dis-continous, featuring a light/strict lockdown when the arrival date exceeds/falls short of a specific value. Calibrated to the ongoing COVID-19 pandemic the baseline model and a battery of robustness checks and extensions imply (iv) lockdowns for 3-4 months, with activity reductions by 25-40 percent, and (v) substantial welfare gains from optimal policy unless the government lacks instruments to stimulate activity after a lockdown.