Research / BFI Working PaperAug 30, 2020

Epidemic Responses Under Uncertainty

Michael Barnett, Greg Buchak, Constantine Yannelis

We examine how policymakers react to a pandemic with uncertainty regarding key epidemiological parameters by embedding a macroeconomic SIR model in a robust control framework. We find that optimal policy under uncertainty generates optimal mitigation responses that are asymmetric with respect to the initial estimate of the pandemic’s severity. When underestimating the severity, the robust control approach leads to a harsher quarantine, closer to the true optimal level, compared to a naive approach. When overestimating, the planner initially implements a policy similar to the true optimal policy but fails to relax it as the pandemic abates.

More Research From These Scholars

BFI Working Paper Mar 31, 2020

How Does Household Spending Respond to an Epidemic? Consumption During the 2020 COVID-19 Pandemic

Scott R. Baker, R.A. Farrokhnia, Steffen Meyer, Michaela Pagel, Constantine Yannelis
Topics:  COVID-19
BFI Working Paper May 8, 2023

Debt Moratoria: Evidence from Student Loan Forbearance

Michael Dinerstein, Constantine Yannelis, Ching-Tse Chen
Topics:  Fiscal Studies, Higher Education & Workforce Training
BFI Working Paper Jul 5, 2022

Data and Welfare in Credit Markets

Mark Jansen, Fabian Nagel, Constantine Yannelis, Anthony Lee Zhang
Topics:  Financial Markets