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29 août 2022
- handle: 10670/1.ngvivb
- hal: hal-03763122
info:eu-repo/semantics/OpenAccess
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Patients--Mortality Mortality, Law of Justification Faith and justification Justification by faith Balancing (Physics) Balance (Physics) BalanceCiter ce document
Christian Hellwig et al., « The Hammer and the Dance: Equilibrium and Optimal Policy during a Pandemic Crisis », HAL-SHS : économie et finance, ID : 10670/1.ngvivb
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We develop a comprehensive framework for analyzing optimal economic policy during a Pandemic crisis in a dynamic economic model that trades off pandemic-induced mortality costs against the adverse economic impact of policy interventions. We use the comparison between planner problem and dynamic decentralized equilibrium to highlight the margins of policy intervention and describe optimal policy actions. As our main conclusion, we provide a strong and novel economic justification for the current approach to dealing with the Pandemic, which is different from the existing health policy rationales. This justification is based on a simple economic concept, the shadow price of infection risks, which succinctly captures the static and dynamic tradeoffs between economic prosperity and mortality risk as the Pandemic unfolds.