The rapid spread of COVID-19 is having devastating effects on the global economy. Governments around the world have been forced to pursue lockdown policies in an attempt to stem the spread of this deadly disease and bend the death curve. 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 consequences of reopening the economy? In this article, we address this question by studying both the model and the data and discuss the challenges we face moving forward.
- The observed decline in daily deaths could be due to two scenarios: lockdown policies and herd immunity.
- Both the model used by epidemiology experts and the data collected thus far cannot distinguish these two scenarios.
- 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.
JEL classification: I1, E6, H12
Key words: COVID-19, social distancing, identification problem, death curve, lockdown, herd immunity, reopening the economy, testing.
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