Finance Seminar with Thomas Philippon, Stern School of Business, NYU
The Department of Finance is proud to announce the upcoming online seminar with Thomas Philippon, Stern School of Business, NYU.
Thomas Philippon will present:
Optimal Mitigation Policies in a Pandemic: Social Distancing and Working from Home
We study the response of an economy to an unexpected epidemic. Households mitigate the spread of the disease by reducing consumption, reducing hours worked, and working from home. Working from home is subject to learning-by-doing and the capacity of the health care system is limited. A social planner worries about two externalities, an infection externality and a healthcare congestion externality. Private agents’ mitigation incentives are weak and biased. We show that private safety incentives can even decline at the onset of the epidemic. The planner, on the other hand, implements front-loaded mitigation policies and encourages working from home immediately. In our calibration, assuming a CFR of 1% and an initial infection rate of 0.1%, private mitigation reduces the cumulative death rate from 2.5% of the initially susceptible population to about 1.75%. The planner optimally imposes a drastic suppression policy and reduces the death rate to 0.15% at the cost of an initial drop in consumption of around 25%.
Location and sign up:
This is an online seminar on Zoom.
Please contact us in order to sign up.