The macroeconomics of age-varying epidemics

Marta Giagheddu, Andrea Papetti

Research output: Contribution to journalArticlepeer-review


We incorporate age-specific socio-economic interactions in a SIR macroeconomic model to study the role of demographic factors for the COVID-19 epidemic evolution, its macroeconomic effects and possible containment measures. We capture the endogenous response of rational individuals who choose to reduce inter- and intra-generational social interactions, consumption- and labor-related personal exposure to the virus, while not internalizing the impact of their actions on others. We find that social distancing measures targeted to the elderly (who face higher mortality risk and are not part of the labor force) are best suited to save lives and mitigate output losses. The optimal economic shutdown generates small gains in terms of lives saved and large output losses, for any given type of social distancing. These results are confirmed by calibrating the model to match real epidemic and economic data in the context of a scenario exercise.

Original languageEnglish
Article number104346
JournalEuropean Economic Review
Publication statusPublished - 2023 Jan

Subject classification (UKÄ)

  • Economics

Free keywords

  • Age differences
  • Containment policies
  • COVID-19
  • Demographics
  • Epidemic
  • Recessions
  • SIR macro model
  • Vaccine


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