Mobility Decisions, Economic Dynamics And Epidemic

Giorgio Fabbri;Salvatore Federico;Davide Fiaschi;Fausto Gozzi
(2022) , 34 pages

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Authors
  • Giorgio FabbriCorresponding member IRES. Univ. Grenoble Alpes, CNRS, INRAE, Grenoble INP, GAEL, 38000 Grenoble, France
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  • Salvatore FedericoUniversit`a degli Studi di Genova, Dipartimento di Economia
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  • Davide FiaschiUniversit`a degli Studi di Pisa, Dipartimento di Economia e Management
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  • Fausto GozziDipartimento di Economia e Finanza, LUISS Guido Carli, Roma
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Abstract
We propose a model, which nests a susceptible-infected-recovered-deceased (SIRD) model of epidemic into a dynamic macroeconomic equilibrium framework with agents’ mobility. The latter affect both their income and their probability of infecting and being infected. Strategic complementarities among individual mobility choices drive the evolution of aggregate economic activity, while infection externalities caused by individual mobility affect disease diffusion. The continuum of rational forward-looking agents coordinates on the Nash equilibrium of a discrete time, finite-state, infinite-horizon Mean Field Game. We prove the existence of an equilibrium and provide a recursive construction method for the search of an equilibrium(a), which also guides our numerical investigations. We calibrate the model by using Italian experience on COVID-19 epidemic and we discuss policy implications.
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Giorgio Fabbri, Salvatore Federico, Davide Fiaschi, & Fausto Gozzi. (2022). Mobility Decisions, Economic Dynamics And Epidemic (LIDAM Discussion Paper IRES/2022/28). https://hdl.handle.net/2078.5/106531