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Principal Investigator

Objective

The main objective of this project is to develop a unified model for simulating infection control and economic activity, which can be used for real-time policy analyses. We will provide easy-to-use codes and hold workshops for policymakers to explain the applications of the model so that we can employ EBPM in the next pandemic crisis. We will also investigate various policy-oriented research questions such as the optimal vaccine distribution, decomposition of sectoral demand and supply shocks, quantification of the prefecture-level tradeoff between infection and economic activity, and estimation of the effect of sectoral demand stimulus. The results of these analyses will be widely disseminated to the general public to broaden the scope of policy discussions for the future potential crisis.

Outline

The global pandemic of a novel coronavirus that spread from 2020 had a major impact on Japan. The annual GDP fell by about 5%, and an unemployment rate increased, especially in contact-intensive industries. In this project, we will develop a model that integrates infectious diseases and economic activities, quantify the relationship between the two, and provide the long-term outlook and optimal policies. The main objective of this research is to construct a transparent model that can be used for policy analysis, to estimate parameters precisely from historical data, and to present a valid simulation of infection and economic activities. The goal is to provide policymakers and the public with policy menus and new insights from the model analysis. There are many possible policies for combating infectious diseases. Presenting a menu of how each policy affects infection and economic loss is very important in the policy-making process, and may contribute to reducing people's anxiety about the future. The baseline model of infection and the economy is set up as the standard SIR model in epidemiology with the addition of a mobility component, which is linked to economic activity. The baseline model can be further extended to analyze the effects of vaccines and group-targeted policies. It is also possible to pursue optimal allocation strategies in the face of limited vaccine supply. In terms of economic impact, we use monthly production and employment data to estimate the shocks caused by the COVID-19 on the supply and demand of each industry. We can then estimate the effect of demand stimulus targeted at specific industries, and conduct ex-post assessment of economic policies during pandemic.