Rachel, Lukasz;
(2024)
The Second Wave.
Review of Economic Design
10.1007/s10058-024-00374-w.
(In press).
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Abstract
What determines whether an epidemic unfolds in multiple waves? In the absence of a vaccine, populations remain vulnerable to future outbreaks as long as susceptibility levels stay above the herd immunity threshold. The effectiveness of mitigation policies is therefore critical: a highly effective lockdown can paradoxically increase the likelihood of a second wave. This paper uses a calibrated model to study both the decentralized equilibrium and the optimal policy in a scenario where mitigation is only moderately effective. The findings show that equilibrium and optimal mitigation strategies are qualitatively similar in this case. Fiscal costs decrease the optimal length of the lockdown, narrowing the gap between equilibrium and optimal policies. We also use the model to evaluate the welfare costs of deviating from the optimal policy.
| Type: | Article |
|---|---|
| Title: | The Second Wave |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1007/s10058-024-00374-w |
| Publisher version: | https://doi.org/10.1007/s10058-024-00374-w |
| Language: | English |
| Additional information: | © The Author(s), 2025. This is an Open Access article distributed under the terms of the Creative Commons Attribution Licence (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. https://creativecommons.org/licenses/by/4.0/ |
| Keywords: | Epidemic, Herd immunity, Equilibrium social distancing, Optimal containment policies |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10201065 |
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