Discussion Paper

Impacts of COVID-19: Mitigation Efforts versus Herd Immunity

Abstract: The rapid spread of COVID-19 is having devastating effects on the global economy. With death curves beginning to bend, governments will soon need to determine when and how to relax lockdown measures. The crucial question is: what are the public health consequences of reopening the economy? In this article, we argue that the observed decline in daily deaths could be due to two scenarios: social distancing measures and herd immunity. Both the widely used SIR model and the data collected thus far cannot distinguish these two scenarios. Such an identification problem generates a large degree of uncertainty about the public health consequences of restarting the economy. Comprehensive testing can help resolve this uncertainty by quickly and accurately identifying new cases so that future outbreaks could be contained by isolation and contact tracing measures.

Keywords: COVID-19; social distancing; identification problem; death curve; lockdown; herd immunity; reopening the economy; testing;

JEL Classification: E6; H12; I1;

https://doi.org/10.29338/ph2020-03

Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: Policy Hub*

Publication Date: 2020-04-27

Number: 2020-3