Abstract: This paper analyzes the intergenerational welfare effects of the economic policy response to the COVID-19 pandemic, with particular attention to containment measures, fiscal expansions, and alternative public debt repayment schemes. We build on Gertler’s (1999) model by introducing the pandemic as a negative shock to survival probabilities. Social distancing and lockdowns reduce mortality among older cohorts but simultaneously depress labor productivity, capturing the key demographic asymmetry of the pandemic. Within this framework, we construct age-specific welfare indices for “young” and “old” agents, as well as a relative welfare metric to evaluate intergenerational trade-offs. Our quantitative analysis yields four main results: (1) in the absence of containment measures, welfare losses are concentrated among older agents through a demographic channel; (2) lockdowns substantially shift the burden of welfare losses toward younger cohorts, reflecting the trade-off between mortality reduction and output contraction; (3) debt-financed fiscal expansions exert only a modest effect on relative welfare compared with the dominant impact of social distancing; (4) the intergenerational distribution of welfare depends critically on debt repayment strategies: front-loaded schemes disproportionately penalize younger generations, whereas postponed repayment schedules favor older cohorts, raising equity and policy-design considerations for future large-scale crises. 

Abstract: We provide direct evidence on how the public expects the government to satisfy its intertemporal budget constraint. In a representative survey of U.S. households, respondents expect only 45% of government debt to be financed by future primary surpluses and 23% to be rolled over indefinitely without ever generating surpluses, as if sustained by a bubble. Experts perceive an even larger bubble (37%). Beliefs respond to fundamentals: at a debt-to-GDP ratio of 150%, the perceived bubble shrinks to 15%. A New Keynesian model calibrated to these beliefs implies a 13% larger government spending multiplier.

Abstract: This paper examines the impact of Non-Pharmaceutical Interventions (NPIs) on public health and economic activity in Italy during 2020-2022. Using the Extended Kalman Filter to estimate time-varying parameters in a SIRD model, we capture changes in infection, recovery, and case-fatality rates influenced by external factors. A VAR model is then employed to analyze the responses of the infection rate, containment measures and mobility to exogenous shocks. The results reveal a health-economic trade-off, with NPIs effectively reducing infections but constraining economic activity. Notably, this trade-off diminishes over time as the reduction in infections becomes more significant. These findings provide valuable insights for policymakers balancing health and economic priorities during pandemics. Lastly, we develop a simplified epidemiological-macroeconomic model that replicates key features of the crisis, including the positive co-movement of macroeconomic variables and the V-shaped recession observed in early 2020. 

A.Y. 2024-2025

• 20297 MONETARY POLICY

• 20970 INTERNATIONAL MACROECONOMICS AND FINANCE

• 30066 ECONOMIA - MODULO 2 (MACROECONOMIA) / ECONOMICS - MODULE 2 (MACROECONOMICS)

• 30459 MACROECONOMICS AND ECONOMIC POLICY

A.Y. 2023-2024

• 20297 MONETARY POLICY

• 30066 ECONOMIA - MODULO 2 (MACROECONOMIA) / ECONOMICS - MODULE 2 (MACROECONOMICS)

• 30459 MACROECONOMICS AND ECONOMIC POLICY

• 30510 MONETARY AND FISCAL POLICY: CURRENT CHALLENGES