We propose a model, which nests a susceptible-infected-recovered-deceased (SIRD) epidemic model into a dynamic macroeconomic equilibrium framework with agents’ mobility. The latter affect both their income and their probability of infecting and being infected. Strategic complementarities among individual mobility choices drive the evolution of aggregate economic activity, while infection externalities caused by individual mobility affect disease diffusion. The continuum of rational forward-looking agents coordinates on the Nash equilibrium of a discrete time, finite-state, infinite-horizon Mean Field Game. We prove the existence of an equilibrium and provide a recursive construction method for the search of an equilibrium(a), which also guides our numerical investigations. We calibrate the model by using Italian experience on COVID-19 epidemic and we discuss policy implications.

Mobility decisions, economic dynamics and epidemic / Fabbri, G.; Federico, S.; Fiaschi, D.; Gozzi, Fausto. - In: ECONOMIC THEORY. - ISSN 0938-2259. - (In corso di stampa), pp. 1-37. [10.1007/s00199-023-01485-1]

Mobility decisions, economic dynamics and epidemic

Gozzi F.
In corso di stampa

Abstract

We propose a model, which nests a susceptible-infected-recovered-deceased (SIRD) epidemic model into a dynamic macroeconomic equilibrium framework with agents’ mobility. The latter affect both their income and their probability of infecting and being infected. Strategic complementarities among individual mobility choices drive the evolution of aggregate economic activity, while infection externalities caused by individual mobility affect disease diffusion. The continuum of rational forward-looking agents coordinates on the Nash equilibrium of a discrete time, finite-state, infinite-horizon Mean Field Game. We prove the existence of an equilibrium and provide a recursive construction method for the search of an equilibrium(a), which also guides our numerical investigations. We calibrate the model by using Italian experience on COVID-19 epidemic and we discuss policy implications.
In corso di stampa
COVID-19, ESIRD, Mean field game, Strategic complementarities
Mobility decisions, economic dynamics and epidemic / Fabbri, G.; Federico, S.; Fiaschi, D.; Gozzi, Fausto. - In: ECONOMIC THEORY. - ISSN 0938-2259. - (In corso di stampa), pp. 1-37. [10.1007/s00199-023-01485-1]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/234944
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