Seminario "Pandemics, Incentives, and Economic Policy: A Dynamic Model"
Miércoles 15/9, 17h
Presentado por Roberto Chang
Abstract
The advent of a pandemic is an exogenous shock, but the dynamics of contagion are very much endogenous ñand depend on choices that individuals make in response to incentives. In such an episode, economic policy can make a di§erence not just by alleviating economic losses but also via incentives that a§ect the trajectory of the pandemic itself. We develop this idea in a dynamic equilibrium model of an economy subject to a pandemic. Just as in conventional SIR models, infection rates depend on how much time people spend at home versus working outside the home. But in our model, whether to go out to work is a decision made by individuals who trade o§ higher pay from working outside the home today versus a higher risk of infection and expected future economic and health-related losses. As a result, pandemic dynamics depend on factors that have no relevance in conventional models. In particular, expectations and forward looking behavior are crucial and can result in multiplicity of equilibria with di§erent levels of economic activity, infection, and deaths. The analysis yields novel policy lessons. For example, incentives embedded in a Öscal package resembling the U.S. CARES Act can result in two waves of infection.
Roberto Chang
Roberto Chang is a Professor of Economics at Rutgers University and a Research Associate at the National Bureau of Economic Research. Before joining Rutgers in 2000, he was a Research Officer at the Federal
Reserve Bank of Atlanta. He has also been an Assistant Professor at NYU and a Visiting Professor at Princeton. Professor Chang has published extensively on monetary economics, exchange rate policy, and financial
crises. He has served in the editorial boards of the Journal of International Economics and the Journal of Development Economics, and as a member of the Economics Panel of the National Science Foundation.
Professor Chang is a native of Peru and holds a Ph.D. in Economics from the University of Pennsylvania.
Zoom Meeting https://utdt.zoom.us/j/95042218085
The advent of a pandemic is an exogenous shock, but the dynamics of contagion are very much endogenous ñand depend on choices that individuals make in response to incentives. In such an episode, economic policy can make a di§erence not just by alleviating economic losses but also via incentives that a§ect the trajectory of the pandemic itself. We develop this idea in a dynamic equilibrium model of an economy subject to a pandemic. Just as in conventional SIR models, infection rates depend on how much time people spend at home versus working outside the home. But in our model, whether to go out to work is a decision made by individuals who trade o§ higher pay from working outside the home today versus a higher risk of infection and expected future economic and health-related losses. As a result, pandemic dynamics depend on factors that have no relevance in conventional models. In particular, expectations and forward looking behavior are crucial and can result in multiplicity of equilibria with di§erent levels of economic activity, infection, and deaths. The analysis yields novel policy lessons. For example, incentives embedded in a Öscal package resembling the U.S. CARES Act can result in two waves of infection.
Roberto Chang
Roberto Chang is a Professor of Economics at Rutgers University and a Research Associate at the National Bureau of Economic Research. Before joining Rutgers in 2000, he was a Research Officer at the Federal
Reserve Bank of Atlanta. He has also been an Assistant Professor at NYU and a Visiting Professor at Princeton. Professor Chang has published extensively on monetary economics, exchange rate policy, and financial
crises. He has served in the editorial boards of the Journal of International Economics and the Journal of Development Economics, and as a member of the Economics Panel of the National Science Foundation.
Professor Chang is a native of Peru and holds a Ph.D. in Economics from the University of Pennsylvania.
Zoom Meeting https://utdt.zoom.us/j/95042218085