47 Pages Posted: 22 Apr 2020 Last revised: 23 Jun 2020

There are 2 versions of this paper

Date Written: April 30, 2020

Abstract

We provide, calibrate and test a realistic model of the spread of SARS-Cov-2 in an

economy with different risks related to age and sectors. The model considers hospital

congestion and response of individuals adjusting their behavior to the virus' spread.

We measure precisely the size of these effects using real data for Italy on intensive care

capacity and mobility decisions; thus our claim is that the tradeoffs we estimate are

quantitatively, rather than qualitatively, approximately correct.

We characterize the policies of containment of the epidemic that are effcient with

respect to number of fatalities and GDP loss. Prudent policies of gradual return to

work may save many lives with limited economic costs, as long as they differentiate

by age group and risk sector. More careful behavior of individuals induced by the

perceived cost of infection may contribute to further reduce fatalities.

