Munich Personal RePEc Archive

An Optimal Policy for Social Resources Allocation: When Outbreak of Infectious Diseases

Shin, Inyong (2020): An Optimal Policy for Social Resources Allocation: When Outbreak of Infectious Diseases.

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Abstract

This paper analyzes the optimal policy for social resources allocation when outbreak of infectious diseases like the coronavirus. Infectious diseases not only pose a threat to human health, but also have a great impact on society and economy. There remains considerable disagreement between economists' views and medical experts' views, for example, a gradual steps policy vs. an immediate lockdown policy. This paper grafts the epidemiological model (Susceptible-Infected-Recovered model or SIR model) for the spread of infectious diseases onto an economic optimization model in order to reconcile the epidemic control and economic activity. This paper considers that we can control the infection rate and recovery rate through our efforts which are parameters in the SIR model, for example, self-quarantine, lockdown, increasing the number of hospital and medical personnel, developing vaccines, etc. This paper calculated the optimal resources allocation and the timing for the infectious diseases. This paper concludes the preventive measures should be implemented before the number of infected people increases (preceding) and the treatment measures should be implemented according to the number of infected people (coinciding). The modified model can be seen as a persuasive model considering the compatibility between epidemic control and economic activity.

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