An analysis by International Business School professor Anna Scherbina shows we would hurt more than help the economy if we do it before mid-June.

The U.S. risks hurting the economy more than helping it if the economy is restarted before mid-June, new research shows.

In the paper, which was published March 27 on the American Enterprise Institute (AEI) website and updated this week, Scherbina found that for at least two more months, the economic benefits of controlling the virus and preventing illness and death are greater than the economic cost of closing most non-essential businesses.

She also found that even after we lift the lockdown, or what economists call suppression, we must keep in place more moderate measures, such as wearing face masks and limiting public gatherings, until a vaccine or an effective drug or treatment becomes widely available.

Otherwise, the economic harm from the viruss spread will be greater than keeping the economy shuttered.

Before coming to the Brandeis International Business School in 2019, Scherbina worked for two years as a senior economist at the U.S. Council of Economic Advisers. While there, she coauthored a paper modeling the economic costs and health impact of a theoretical influenza pandemic on the United States.

When Scherbina wrote her paper for AEI, some 30,000 Americans were infected with COVID-19; as of last week the figure stood at 460,000; Scherbina revised her conclusions to include the new data.

She also stressed that some assumptions in her model depend on still unfolding government policies and human behavior while others may change as we learn more about the virus.

In her analysis, Scherbina compared the economic costs of businesses staying closed, which causes a steep drop in the gross domestic product, with the economic benefits of a lockdown that prevents people from getting sick and dying.

With widespread illness, productivity drops as people skip work to recover or care for their sick relatives. There are also increased medical costs. Policymakers and economists also assign a dollar value to every life, based on a calculation of how much we would be willing to pay to prevent the death.

In determining the mid-June date, Scherbina used a relatively optimistic estimate of how successful we are in limiting the virus's spread during the lockdown.

Left to spread uncontrollably, the virus has a reproduction rate of 2.4, meaning the typical person would infect an average of 2.4 people over the course of their illness (assuming that no one in the population is immune).

Scherbina's optimistic scenario assumes that our current containment efforts reduce the reproduction rate to 0.5 by the time the economy reopens.

Both these estimates assume that mitigation efforts will be in place when the lockdown lifts and will largely succeed in slowing the spread of the virus until a vaccine or other treatment is available.

If mitigation efforts fail, the gains from the lockdown will be negated, and we may have to enter another lockdown period, Scherbina said.

Scherbina also calculated the cost to the economy if we made no efforts to control the virus at $9 trillion, a more than 40% drop in the gross domestic product.

The rest is here:
When should we reopen the economy? - Brandeis University