Becker Brown Bag: The Great Lockdown and the Big Stimulus: Tracing the Pandemic Possibility Frontier for the US

The COVID-19 pandemic has fueled a global health and economic crisis of unprecedented severity. Since person-to-person contact is essential for a substantial fraction of the US economy to function, and since such close contact allows the virus to spread easily, both fatalities and economic losses are unavoidable. Likewise, much of the debate around the appropriate policy response to the pandemic hinges on one question: How large is the trade-off between saving lives and preserving livelihoods?

In this new paper, Prof. Greg Kaplan and co-authors quantified the distributional effects of the pandemic and associated policy responses across different types of workers and households. In doing so, this work directs attention away from the lives vs. livelihood trade-off to the equally important choice over who carries the heaviest economic burden. This new focus leads to consideration of novel policy proposals that leverage the power of taxation to achieve desired outcomes. In the absence of further mitigation efforts, the authors’ model predicts another recession in the fall, and a prolonged W-shaped recovery.

BFI’s Becker Brown Bag Series invites prominent economists to present cutting-edge research and engage MBA students, undergraduates, and faculty in discussion. The talks highlight the practical use of economics for answering real-world questions pertinent to businesses and policy makers.

All times listed are Central Standard Time.

View Working Paper

View Economic Finding: Occupation Effects of COVID-19

View Economic Finding: The Impact of the CARES Act on Economic Welfare

View Economic Finding: A Tax-Based Alternative to Lockdowns