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Working Paper Alert I proudly present COVID-Town, an agent-based model that allows to study the spread of Sars-CoV2 and its impact on the economy under varying policy scenarios.
Key takeaways below
Link: http://shorturl.at/fhlos
#covideconomics #CovidTown #EconTwitter
Timing is crucial: my model suggests that the German death toll would have been at 25,000 in the beginning of June if the government had acted just one week later (vs. 9k empirically).
If the containment measures had been taken one week earlier, total deaths would have been 3,5k.
If the containment measures had been taken one week earlier, total deaths would have been 3,5k.
Expansionary fiscal policy is crucial (1): In this stylized virtual version of the German economy, the consumption good sector would break down by almost 30%, if there was a zero-deficit clause restricting fiscal policy. The recovery is incomplete, even after COVID.
Expansionary fiscal policy is crucial (2): Anticyclical fiscal policy is on the other hand able to contain the recession and allows for a V-shaped recovery after eliminating the threat of the virus and lifting the containment measures.
Interestingly, the increased economic performance does not come at the price of an increased mortality. Unemployed workers would not all stay at home, but engage in leisure activities that also bear the risk of an infection.
My model #COVIDTown thus suggests that an optimal response beyond herd immunity combines a) early introduction of containment measures and b) strong fiscal stimulus to keep employment in lower risk sectors up. #EconTwitter
This model is calibrated with data on German households, demography, employment, wages, profits, time use, retirement homes, hospitals, firm demography
The model is fitted to the observed deaths curve and an infection curve based on RKI numbers and a dark figure estimate (of 2).
The model is fitted to the observed deaths curve and an infection curve based on RKI numbers and a dark figure estimate (of 2).
This model features 8 different types of human agents (from children to firm owners), three private industries (factories, offices, leisure facilities), which vary wrt their epidemiological and economic characteristics and three branches of government activity (+ transfers).
In contrast to the standard SIR approach, this model is a heterogeneous mixing model as your probability to become infected depends on your connections in various social networks which are determined by your job, household members, friends, leisure preferences etc.
COVID-Town also offers an agent-based analysis of the leisure industry, which is believed to play an important role in the spread of the virus.
This model also features #care work. Young children require care, and if schools and daycare facilities are closed, output will suffer.
This model also features #care work. Young children require care, and if schools and daycare facilities are closed, output will suffer.
The economic part of Covid-Town is still very simplified. I hope that this paper will give impetus to combining the macroeconomic and the epidemiological abm literature in a more advanced way in the future, which seems to be highly promising. (The end of this thread)
Maybe interesting for @AndreaRoventini @angusarmstrong8 @arthurturrell @CovidEconomics @eaepe @NiallGlynn @ClaudiusGrabner @m_waeck @TimonScheuer
