Maryam Farboodi, Gregor Jarosch, Robert Shimer
Analysis of a conventional dynamic economic model integrating individual optimization, equilibrium interactions, and policy analysis into the canonical epidemiological model highlights three key features of the optimal policy in a pandemic: it imposes immediate, discontinuous social distancing; it keeps social distancing in place for a long time or until treatment is found; and it is never extremely restrictive, keeping the effective reproduction number mildly above the share of the population susceptible to the disease.
