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Information and Inequality in the Time of a Pandemic
Author:
Allan Dizioli
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Roberto Pinheiro null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2020: Issue 188
Language:
English
Publication Date:
11 Sep 2020
DOI:
https://doi.org/10.5089/9781513556307.001
ISBN:
9781513556307
ISSN:
1018-5941
Pages:
49
Keywords:
WP; infection rate; asymptomatic infection; unconstrained agent; Bellman equation; time allocation; flow utility; arrival rate; infected agent; Labor supply; Public expenditure review; COVID-19; testing; asymptomaticity; inequality
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We introduce two types of agent heterogeneity in a calibrated epidemiological search model. First, some agents cannot afford staying home to minimize their virus exposure, while others can. Our results show that these poor agents bear most of the epidemic’s health costs. Moreover, we show that having more agents who do not change their behavior during the pandemic could lead to a deeper recession. Second, agents are heterogeneous in developing symptoms. We show that diseases with higher share of asymptomatic cases, even if less lethal, lead to worse health and economic outcomes. Public policies such as testing, quarantining, and lockdowns are particularly beneficial in economies with a larger share of poor agents. However, lockdowns lose effectiveness when part of the agents take precautions to minimize virus exposure independent of government actions.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund