The impact of Covid-19, associated behaviours and policies on the UK economy: A computable general equilibrium model.
ABSTRACT: We estimate the potential impact of COVID-19 on the United Kingdom economy, including direct disease effects, preventive public actions and associated policies. A sectoral, whole-economy macroeconomic model was linked to a population-wide epidemiological demographic model to assess the potential macroeconomic impact of COVID-19, together with policies to mitigate or suppress the pandemic by means of home quarantine, school closures, social distancing and accompanying business closures. Our simulations indicate that, assuming a clinical attack rate of 48% and a case fatality ratio of 1.5%, COVID-19 alone would impose a direct health-related economic burden of £39.6bn (1.73% of GDP) on the UK economy. Mitigation strategies imposed for 12 weeks reduce case fatalities by 29%, but the total cost to the economy is £308bn (13.5% of GDP); £66bn (2.9% of GDP) of which is attributable to labour lost from working parents during school closures, and £201bn (8.8% of GDP) of which is attributable to business closures. Suppressing the pandemic over a longer period of time may reduce deaths by 95%, but the total cost to the UK economy also increases to £668bn (29.2% of GDP), where £166bn (7.3% of GDP) is attributable to school closures and 502bn (21.9% of GDP) to business closures. Our analyses suggest Covid-19 has the potential to impose unprecedented economic costs on the UK economy, and whilst public actions are necessary to minimise mortality, the duration of school and business closures are key to determining the economic cost. The initial economic support package promised by the UK government may be proportionate to the costs of mitigating Covid-19, but without alternative measures to reduce the scale and duration of school and business closures, the economic support may be insufficient to compensate for longer term suppression of the pandemic which could generate an even greater health impact through major recession.
Project description:The paper studies the effects of mitigation measures on environment during a pandemic. Various mitigation measures such as business closures have been imposed to reduce health risks. Such measures also limit economic activities and reduce emissions. Measures disproportionately affect the contact-intensive sectors such as the leisure and hospitality industry, as their economic activities involve more person-to-person interactions. Thus, the extent of emission reduction depends on the severity of a measure and the size of the contact-intensive sectors. Using data on business and restaurant closures, school closures and bans on gatherings across 50 U.S. states during the Covid-19 pandemic, an empirical analysis shows that emissions decrease more in states with a more stringent measure and a larger share of the contact-intensive sectors.<h4>Supplementary information</h4>The online version contains supplementary material available at 10.1007/s10640-020-00535-9.
Project description:Because macroeconomic data is published with a substantial delay, assessing the health of the economy during the rapidly evolving COVID-19 crisis is challenging. We develop a fever curve for the Swiss economy using publicly available daily financial market and news data. The indicator can be computed with a delay of 1 day. Moreover, it is highly correlated with macroeconomic data and survey indicators of Swiss economic activity. Therefore, it provides timely and reliable warning signals if the health of the economy takes a turn for the worse.
Project description:Research has shown the value of conducting a macroeconomic analysis of the impact of influenza pandemics. However, previous modelling applications focus on high-income countries, and there is a lack of evidence concerning the potential impact of an influenza pandemic on lower- and middle-income countries.To estimate the macroeconomic impact of pandemic influenza in Thailand, South Africa and Uganda with particular reference to pandemic (H1N1) 2009.A single-country whole-economy Computable General Equilibrium (CGE) model was set up for each of the three countries in question and used to estimate the economic impact of declines in labour attributable to morbidity, mortality and school closure.Overall GDP impacts were less than 1% of GDP for all countries and scenarios. Uganda's losses were proportionally larger than those of Thailand and South Africa. Labour-intensive sectors suffer the largest losses.The economic cost of unavoidable absence in the event of an influenza pandemic could be proportionally larger for low-income countries. The cost of mild pandemics, such as pandemic (H1N1) 2009, appears to be small, but could increase for more severe pandemics and/or pandemics with greater behavioural change and avoidable absence.
Project description:COVID-19 has heightened human suffering, undermined the economy, turned the lives of billions of people around the globe upside down, and significantly affected the health, economic, environmental and social domains. This study aims to provide a comprehensive analysis of the impact of the COVID-19 outbreak on the ecological domain, the energy sector, society and the economy and investigate the global preventive measures taken to reduce the transmission of COVID-19. This analysis unpacks the key responses to COVID-19, the efficacy of current initiatives, and summarises the lessons learnt as an update on the information available to authorities, business and industry. This review found that a 72-hour delay in the collection and disposal of waste from infected households and quarantine facilities is crucial to controlling the spread of the virus. Broad sector by sector plans for socio-economic growth as well as a robust entrepreneurship-friendly economy is needed for the business to be sustainable at the peak of the pandemic. The socio-economic crisis has reshaped investment in energy and affected the energy sector significantly with most investment activity facing disruption due to mobility restrictions. Delays in energy projects are expected to create uncertainty in the years ahead. This report will benefit governments, leaders, energy firms and customers in addressing a pandemic-like situation in the future.
Project description:In response to the COVID-19 health crisis, the French government has imposed drastic lockdown measures for a period of 55 days. This paper provides a quantitative assessment of the economic and environmental impacts of these measures in the short and long term. We use a Computable General Equilibrium model designed to assess environmental and energy policies impacts at the macroeconomic and sectoral levels. We find that the lockdown has led to a significant decrease in economic output of 5% of GDP, but a positive environmental impact with a 6.6% reduction in CO2 emissions in 2020. Both decreases are temporary: economic and environmental indicators return to their baseline trajectory after a few years. CO2 emissions even end up significantly higher after the COVID-19 crisis when we account for persistently low oil prices. We then investigate whether implementing carbon pricing can still yield positive macroeconomic dividends in the post-COVID recovery. We find that implementing ambitious carbon pricing speeds up economic recovery while significantly reducing CO2 emissions. By maintaining high fossil fuel prices, carbon taxation reduces the imports of fossil energy and stimulates energy efficiency investments while the full redistribution of tax proceeds does not hamper the recovery.
Project description:<h4>Background</h4>Previous research has demonstrated the value of macroeconomic analysis of the impact of influenza pandemics. However, previous modelling applications focus on high-income countries and there is a lack of evidence concerning the potential impact of an influenza pandemic on lower- and middle-income countries.<h4>Objectives</h4>To estimate the macroeconomic impact of pandemic influenza in Thailand, South Africa and Uganda with particular reference to pandemic (H1N1) 2009.<h4>Methods</h4>A single-country whole-economy computable general equilibrium (CGE) model was set up for each of the three countries in question and used to estimate the economic impact of declines in labour attributable to morbidity, mortality and school closure.<h4>Results</h4>Overall GDP impacts were less than 1% of GDP for all countries and scenarios. Uganda's losses were proportionally larger than those of Thailand and South Africa. Labour-intensive sectors suffer the largest losses.<h4>Conclusions</h4>The economic cost of unavoidable absence in the event of an influenza pandemic could be proportionally larger for low-income countries. The cost of mild pandemics, such as pandemic (H1N1) 2009, appears to be small, but could increase for more severe pandemics and/or pandemics with greater behavioural change and avoidable absence.
Project description:Background. Malaria is an important health and economic burden in sub-Saharan Africa. Conventional economic evaluations typically consider only direct costs to the health care system and government budgets. This paper quantifies the potential impact of malaria vaccination on the wider economy, using Ghana as an example. Methods. We used a computable general equilibrium model of the Ghanaian economy to estimate the macroeconomic impact of malaria vaccination in children under the age of 5, with a vaccine efficacy of 50% against clinical malaria and 20% against malaria mortality. The model considered changes in demography and labor productivity, and projected gross domestic product (GDP) over a time frame of 30 years. Vaccine coverage ranging from 20% to 100% was compared with a baseline with no vaccination. Results. Malaria vaccination with 100% coverage was projected to increase the GDP of Ghana over 30 years by US$6.93 billion (in 2015 prices) above the baseline without vaccination, equivalent to an increase in annual GDP growth of 0.5%. Projected GDP per capita would increase in the first year due to immediate reductions in time lost from work by adults caring for children with malaria, then decrease for several years as reductions in child mortality increase the number of dependent children, then show a sustained increase after Year 11 due to long-term productivity improvements in adults resulting from fewer malaria episodes in childhood. Conclusion. Investing in improving childhood health by vaccinating against malaria could result in substantial long-term macroeconomic benefits when these children enter the workforce as adults. These macroeconomic benefits are not captured by conventional economic evaluations and constitute an important potential benefit of vaccination.
Project description:Recent increases in life expectancy may greatly expand future Alzheimer's Disease (AD) burdens. China's demographic profile, aging workforce and predicted increasing burden of AD-related care make its economy vulnerable to AD impacts. Previous economic estimates of AD predominantly focus on health system burdens and omit wider whole-economy effects, potentially underestimating the full economic benefit of effective treatment.AD-related prevalence, morbidity and mortality for 2011-2050 were simulated and were, together with associated caregiver time and costs, imposed on a dynamic Computable General Equilibrium model of the Chinese economy. Both economic and non-economic outcomes were analyzed.Simulated Chinese AD prevalence quadrupled during 2011-50 from 6-28 million. The cumulative discounted value of eliminating AD equates to China's 2012 GDP (US$8 trillion), and the annual predicted real value approaches US AD cost-of-illness (COI) estimates, exceeding US$1 trillion by 2050 (2011-prices). Lost labor contributes 62% of macroeconomic impacts. Only 10% derives from informal care, challenging previous COI-estimates of 56%.Health and macroeconomic models predict an unfolding 2011-2050 Chinese AD epidemic with serious macroeconomic consequences. Significant investment in research and development (medical and non-medical) is warranted and international researchers and national authorities should therefore target development of effective AD treatment and prevention strategies.
Project description:By 15 April 2020, more than 1.5 billion students worldwide experienced school closures in an effort to slow the spread of a novel coronavirus, severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), during the worldwide coronavirus disease 2019 (COVID-19) pandemic. These interruptions in formal in-person educational experiences caused adverse consequences on school-age children's academic outcomes. Using a pre-existing database, we calculated changes in children's reading ability without formal education (i.e., the summer months). The resultant models predicted that the rate of reading ability gain in kindergarten children during COVID-19 school closures without formal in-person education will decrease 66% (2.46 vs. 7.17 points/100 days), compared to the business-as-usual scenario, resulting in a 31% less reading ability gain from 1 January 2020 to 1 September 2020. Additionally, the model predicted that kindergarten children who have books read to them daily would have 2.3 points less loss (42%) compared to those who do not, who are predicted to have a 5.6-point loss during the same time period. Even though reading books to children will not substitute the critical role of formal education in teaching children how to read, families, educators, and policy makers can promote this simple strategy to facilitate and maintain reading ability gain during school closures, which may be a common occurrence as nations see the public health benefits of physical distancing for the current and future pandemic outbreaks.
Project description:OBJECTIVE:To replicate and analyse the information available to UK policymakers when the lockdown decision was taken in March 2020 in the United Kingdom. DESIGN:Independent calculations using the CovidSim code, which implements Imperial College London's individual based model, with data available in March 2020 applied to the coronavirus disease 2019 (covid-19) epidemic. SETTING:Simulations considering the spread of covid-19 in Great Britain and Northern Ireland. POPULATION:About 70 million simulated people matched as closely as possible to actual UK demographics, geography, and social behaviours. MAIN OUTCOME MEASURES:Replication of summary data on the covid-19 epidemic reported to the UK government Scientific Advisory Group for Emergencies (SAGE), and a detailed study of unpublished results, especially the effect of school closures. RESULTS:The CovidSim model would have produced a good forecast of the subsequent data if initialised with a reproduction number of about 3.5 for covid-19. The model predicted that school closures and isolation of younger people would increase the total number of deaths, albeit postponed to a second and subsequent waves. The findings of this study suggest that prompt interventions were shown to be highly effective at reducing peak demand for intensive care unit (ICU) beds but also prolong the epidemic, in some cases resulting in more deaths long term. This happens because covid-19 related mortality is highly skewed towards older age groups. In the absence of an effective vaccination programme, none of the proposed mitigation strategies in the UK would reduce the predicted total number of deaths below 200?000. CONCLUSIONS:It was predicted in March 2020 that in response to covid-19 a broad lockdown, as opposed to a focus on shielding the most vulnerable members of society, would reduce immediate demand for ICU beds at the cost of more deaths long term. The optimal strategy for saving lives in a covid-19 epidemic is different from that anticipated for an influenza epidemic with a different mortality age profile.