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Economic Modelling 120 (2023) 106147
Contents lists available at ScienceDirect
Economic Modelling
journal homepage: www.journals.elsevier.com/economic-modelling
Macroeconomic consequences of the COVID-19 pandemic☆

Terrie Walmsley a, b, *, Adam Rose a, c, Richard John a, d, Dan Wei a, c, Jakub P. Hlávka a, c, e,
Juan Machado a, Katie Byrd a, d
a
Center for Risk and Economic Analysis of Threats and Emergencies (CREATE), USC, Los Angeles, CA, USA
b
Department of Economics, Dana and David Dornsife College of Letters, Arts and Sciences, University of Southern California (USC), Los Angeles, CA, USA
c
Sol Price School of Public Policy, USC, Los Angeles, CA, USA
d
Department of Psychology, Dana and David Dornsife College of Letters, Arts and Sciences, USC, Los Angeles, CA, USA
e
Leonard D. Schaeffer Center for Health Policy & Economics, USC, Los Angeles, CA, USA
A R T I C L E I N F O A B S T R A C T
Handling editor: Angus Chu We estimate the economic impacts of COVID-19 in the U.S. using a disaster economic consequence analysis
framework implemented by a dynamic computable general equilibrium (CGE) model. This facilitates identifi
JEL classification: cation of relative influences of several causal factors as “shocks” to the model, including mandatory business
C68 E37 I18 F19 closures, disease spread trajectories, behavioral responses, resilience, pent-up demand, and government stimulus
Keywords: packages. The analysis is grounded in primary data on avoidance behavior and healthcare parameters. The
Disaster economics decomposition of the influence of various causal factors will help policymakers offset the negative influences and
CGE Modeling
reinforce the positive ones during the remainder of this pandemic and future ones.
COVID-19
Avoidance behavior
Resilience
1. Introduction and overview COVID-19 deaths in the U.S. through December 2022 (CDC, 2022), are
greater than the U.S. death toll over the past four decades of the
1.1. Background HIV/AIDS epidemic of approximately 700,000 people (KFF, 2021) and
U.S. deaths from the Spanish Flu a century ago of approximately 675,
COVID-19 has had major consequences for the economy of the 000 people (CDC, 2020h). U.S. deaths from COVID-19 are more than
United States. Several studies have estimated its total impacts on GDP in nine times the country’s death toll from the influenza pandemic of
the trillions of dollars, even before the Delta and Omicron variants ran 1957–1958 (CDC, 2020h) and the Hong Kong flu in 1968 (CDC, 2020h).
their course (del Rio-Chanona et al., 2020; Dixon et al., 2020; Ludvigson COVID-19 is caused by the SARS-CoV-2 virus, first recorded in the U.S.
et al., 2020; Thunström et al., 2020; Walmsley et al., 2021b). The pan in January 2020.
demic’s total economic impacts are estimated to be twice as great as Initial studies of the economics of COVID-19 have primarily used
those of the Great Recession, 20 times greater than the 2001 World macroeconomic and financial models, likely because the most recent
Trade Center attacks, and 40 times greater than any natural disaster that great disaster to hit the U.S. was a financial meltdown. Moreover, given
befell the country in this century (Rose, 2021). The more than 1,000,000 the nature of these models in dealing with aggregates and the lack of
☆
The authors are grateful to the DHS Center for Accelerating Operational Efficiency (CAOE) for its financial support. We thank Tony Cheesebrough and other
members of the research project stakeholder team for their helpful comments on earlier presentations of our work. We acknowledge the input from audiences at
professional presentations of the research at meetings of various academic associations over the past year. We acknowledge Andrew Kinoshita, Bari Noor, Kon
stantinos Papaefthymiou, and Adam Einbinder for their research assistance. We are also grateful to the experts who have provided input to the team on epidemi
ological and health outcomes modeling. However, any opinions, findings, conclusions or recommendations in this document are those of the authors and do not
necessarily reflect views of DHS or the University of Southern California.
* Corresponding author. Department of Economics, Dana and David Dornsife College of Letters, Arts and Sciences, University of Southern California, 3620 South
Vermont Ave. Kaprielian (KAP) Hall, 300, Los Angeles, CA 90089, USA.
E-mail addresses: [email protected] (T. Walmsley), [email protected] (A. Rose), [email protected] (R. John), [email protected] (D. Wei), [email protected]
(J.P. Hlávka), [email protected] (J. Machado), [email protected] (K. Byrd).
https://doi.org/10.1016/j.econmod.2022.106147
Received 7 March 2022; Received in revised form 30 November 2022; Accepted 12 December 2022
Available online 21 December 2022
0264-9993/© 2022 Elsevier B.V. All rights reserved.
T. Walmsley et al. Economic Modelling 120 (2023) 106147
data at the early stages, the modeling approaches have primarily been model, while the current study utilizes primary data and performs the
top-down. Thus, they were only able to include a limited number of analysis with a dynamic CGE model.
causal factors unique to the pandemic and its impact on the overall The decomposition of the influence of various causal factors is
economy.1 important for several reasons. First, it improves analytical insight into
An alternative is a bottom-up approach that focuses on individual their workings and interrelationships. Second, it enables policymakers
causal factors prevalent in disasters, including economy-wide impacts, to identify the most prominent causal factors, which is the first step
though not including all financial considerations (likely to be minor in toward making adjustments to offset the negative influences and rein
comparison). Research on the impacts of disasters has led to the devel force the positive ones. For example, our analysis indicates that the
opment of a comprehensive economic consequence analysis (ECA) mandatory closures by far had the largest negative effect on the results
framework that has applicability to COVID-19. This framework extends and that the slow reopenings, due to such factors as supply-chain bot
ordinary impact analysis covering standard direct and indirect effects to tlenecks and mixed messages and political debate about COVID conta
include resilience and behavioral responses that have played an especially gion, continued some of that influence. Avoidance effects and telework
prominent role in a range of disasters including earthquakes, hurricanes, were also prominent influences. In the case of the former, improved risk
ocean oil spills, terrorist attacks among others (Rose et al., 2014; Rose communication, a relatively inexpensive way to quell fear, has great
et al., 2017; Prager et al., 2017; Botzen et al., 2020). We will demon potential to reduce economic losses. The same is true of public and
strate below how the framework is applicable to the COVID pandemic as private decision-makers placing a greater emphasis on providing remote
well. For example, resilience is exemplified by telework and spending work options.
out of pent-up demand. Behavioral responses are exemplified by
avoidance of public gathering places, mass transit, workplaces, and
1.3. Overview
educational institutions.
This paper is divided into 11 sections. Section 2 presents a summary
1.2. Purpose of the ECA framework. Section 3 provides the basis of the survey of
avoidance behavior and its results. Section 4 presents the modeling re
The purpose of this paper is to estimate the total economic impacts of sults of health outcomes under alternative pandemic scenarios in terms
COVID-19 in the U.S. We apply the CREATE ECA framework in the of the efficacy of interventions informed by healthcare interviews.
process, which enables us to identify the relative influence of several Section 5 presents the analysis of data on mandatory closures, reopen
causal factors. We utilize a state-of-the-art dynamic, multi-country CGE ing, telework, and pent-up demand, as well as the refinement of the
model to estimate the time path of the impacts of these factors. CGE avoidance and healthcare data for inclusion in the CGE model. This
analysis essentially models the economy as a set of interconnected section also presents an assessment of the six federal stimulus packages
supply chains, which enables us to calculate indirect effects as well. that have been enacted to date and how they are translated for use in the
Moreover, our analysis is based on the most up-to-date historical data on CGE model. Section 6 presents the workings of the CGE model. Section 7
key causal factors and primary data relating to avoidance behavior and provides a presentation and the interpretation of the aggregate impacts,
health outcomes and the effects of alternative intervention scenarios. as well as a decomposition of the results. Section 8 provides a compar
Avoidance is the main behavioral response, and in this case pertains to ison of the results with other recent findings and discusses the limita
people engaging in 10 types of activities like retail shopping, going to tions of our analysis. Section 8 provides a summary and suggestions for
work, sending children to school, using public transportation, and going future research.2
to entertainment venues. Moreover, we base our estimates of health
outcomes on interviews with medical professionals. We decompose our 2. A disaster economics framework
analysis by performing a set of sequential dynamic simulations begin
ning with mandatory closures, gradual reopenings, avoidance behavior, 2.1. Overview
and shifts in level and composition of healthcare. We include aspects of
resilience, such as the increase in telework and the injection of pent-up A major example of a disaster economics approach is the CREATE3
demand at later stages of the recovery. Finally, we include the impact of Economic Consequence Analysis (ECA) Framework (Rose et al., 2009;
various stimulus packages. All of these effects are disaggregated ac 2017; Rose, 2015), which has been applied to numerous actual and
cording to the 65 sectors of the dynamic CGE model to improve the simulated disasters (see, e.g., Rose et al., 2009; Sue Wing et al., 2016;
accuracy of the estimation since general equilibrium (supply-chain) ef Chen et al., 2017), including a moderate-sized pandemic (Prager et al.,
fects differ by sector. Given the many uncertainties around several
causal factors and the trajectory of infection/hospitalization/deaths due
to COVID, we consider alternative scenarios embodying combinations of 2
We also provide several data appendices for this paper, some of them quite
key assumptions, and including several sensitivity tests. extensive. Appendix A presents the modeling of the various intervention sce
This study builds on prior work of the research team on the economic narios; estimates of the number of infected international travelers, vaccination
consequences of COVID-19. Walmsley et al. (2021a) estimated the projections, and transmission reductions in each intervention scenario are also
consequences of mandatory closures not only in the U.S. but around the provided in this appendix. In Appendix B, direct output impacts by sector for
globe. Walmsley et al. (2021b) used more up-to-date data to examine the mandatory closures and the reopening process are estimated and presented for
effect of reopenings through the summer of 2020. Rose et al. (2021) six-month periods. This Appendix also presents the results of health-related
analyzed the transmission of these consequences through international impacts, including labor force workday losses and COVID-related health ex
penditures by health outcome category and by time period for individual sce
trade between the U.S., China, and the rest of the world. All of these
narios, as well as the data for estimating pent-up demand. In Appendix C,
studies included major causal factors analyzed in the current study,
detailed stimulus bill provisions, their mapping to CGE model sectors, and
though they omitted the effects of fiscal stimulus packages. Moreover, methods adopted to implement the simulations are presented. Appendix D
all of the studies were based on secondary data and used a static CGE provides detailed descriptions on the modeling of the impacts of causal factors.
Appendix E presents the impacts on sectoral production in the first semi-annual
period of 2020 due to the pandemic, decomposed by causal effect. In addition,
1
In fact, U.S. Bureau of Economic Analysis (2021) qualifies its recent eco we also provide a complete copy of the avoidance behavior survey as a separate
nomic forecasts by stating: “The full economic effects of the COVID-19 supplementary file to this paper.
3
pandemic cannot be quantified in the GDP estimate because the impacts are CREATE stands for the National Center for Risk and Economic Analysis of
generally embedded in source data and cannot be separately identified." Threats and Emergencies.
2
2017). It represents an advance over conventional economic impact CGE formulation enables us to model the time-path of the impacts of the
analysis that has been applied for decades to more ordinary situations various factors, including lags in their effects. In the next two sections
such as the closing of an automobile plant. we will indicate how two of these causal factors are incorporated into
It begins with the specification of direct economic impacts and then the modeling in terms of shocks.
typically applies a state-of-the-art economy-wide model, such as a
computable general equilibrium (CGE) model, to estimate total eco 3. Avoidance behavior survey
nomic impacts. However, its major contribution is the inclusion of two
additional considerations unique to disasters. 3.1. Overview
The first is resilience, which pertains to various actions taken by
producers, consumers, and governments to recover from the shock and Avoidance behavior has the potential to significantly affect the
mute the negative impacts on economic activity by using remaining bottom-line economic impacts of COVID-19. The present study advances
resources efficiently (Rose and Liao, 2005; Rose et al., 2009; Rose et al., prior methods developed for survey research by the authors on the
2017; Martin and Sunley, 2014). For example, Rose et al. (2009) esti public’s response to flu pandemics (Rosoff et al., 2012) and urban bio
mated that the rapid relocation of tenants of the World Trade Center logical terror attacks (Rosoff et al., 2013). The survey estimates changes
following the 9/11 attacks reduced the potential GDP impacts by 72%. in behavior due to the COVID-19 pandemic in 10 different domains:
Several other studies have found various other resilience tactics (e.g.,
conservation, input substitution, inventories, excess capacity) to be a 1) Staying home from work
powerful strategy to reduce business interruption (BI) losses from di 2) Keeping children home from school
sasters in the range of 20%–80% of the potential losses based on surveys 3) Canceling or postponing medical and dental appointments
and simulation analyses (see, e.g., Kajitani and Tatano, 2009; Wei et al., 4) Canceling or postponing professional grooming and spa
2020; Dormady et al., 2022). treatments
The ECA framework also includes behavioral responses, which are 5) Canceling or postponing domestic and international air travel
typically motivated by fear, often far beyond the site of the disaster, and 6) Avoiding public transportation, e.g., taking the bus, rideshare
exacerbate the losses (e.g., von Winterfeldt and O’Sullivan, 2006; Gor 7) Avoiding local leisure activities, e.g., dining out, bars
don et al., 2007; Rose, 2022). The 9/11 Study also found that more than 8) Avoiding shopping, e.g., grocery, miscellaneous shopping
80% of the GDP impacts were due to the almost two-year reduction in 9) Avoiding recreational activities, e.g., golf, tennis, swimming
airline travel and related tourism. Other studies have found that 10) Avoiding large crowds, e.g., sports events, concerts, shows
behavioral responses to disasters can increase BI losses by one or two
orders of magnitude (see, e.g., Giesecke et al., 2012; Rose et al., 2017; For each domain, a representative sample of U.S. adult participants
Gertz and Davies, 2019). was asked to consider their behavior over the six months from
November 2020 to April 2021 compared to their behavior before the
2.2. Causal factors affecting the economic consequences of COVID-19 pandemic (pre-March 2020). Participants indicated whether specific
activities had increased, decreased, or stayed the same in the previous
The CREATE ECA Framework helps us distinguish several different six months compared to the same activities before the pandemic. Par
categories of factors affecting the consequences of disasters. These fac ticipants who reported a change in the activity were asked to indicate
tors can be summarized in general terms as: the amount of increase or decrease and the reason for the change.
• Ordinary direct impacts relating to property damage, economic ac 3.2. Survey content
tivity, and health
• Remediation, repair, and reconstruction A series of specific activities were identified within each of the 10
• Resilience domains, and participants were asked to reflect on their engagement in
• Behavioral responses each activity during the two distinct periods. Participants who indicated
• Indirect economic impacts stemming from the above four categories. a change in engagement were also asked to estimate absolute fre
quencies or percentages of increase or decrease (depending on the ac
In this paper we populate these categories with specific causal factors tivity). To estimate changes due specifically to pandemic avoidance,
related to COVID-19, which become our model “shocks”: participants were also asked to indicate whether the change was due
primarily to one of three reasons: 1) Unavailability of the activity due to
1. Mandatory closures [Behavioral Linkage] COVID, 2) Avoidance of the activity by the respondent due to COVID, or
2. Reopenings [Behavioral Linkage] 3) Other.4 A complete copy of the entire survey can be found in Rose
3. Workforce declines due to health issues [Direct Effects] et al. (2021).
4. Telework [Resilience]
5. Consumption and workforce declines due to avoidance [Behavioral
Linkage] 3.3. Participants and sampling weights
6. Changes in net demand for health care services [Direct Effects of
Pandemic and Behavioral Linkage in part] Data were collected in two separate waves – April 23, 2021, and May
7. Pent-up demand [Resilience] 3, 2021. All data were collected using the crowdsourcing platform,
8. Stimulus packages [Resilience at the macroeconomic level]
9. Indirect effects of all of the above 4
For example, for medical appointments, participants were asked whether
they had avoided: a) routine medical exams, b) medical exams for non-life-
Nearly every one of these factors involves some aspects of resilience
threatening acute problems, and c) recommended medical procedures during
and behavioral linkages. This helps illustrate that conventional top-
the previous six months. Participants were also asked if they had substituted
down macroeconomic analysis is likely to miss important consider telemedicine for in-person appointments. Participants who reported avoiding
ations in estimating the impacts of the pandemic. This modeling an exam or procedure were asked how many they had avoided over the last six
approach serves as a valuable organizing framework for the various months and were asked to select the primary reason for avoidance: appoint
factors and is especially adept at estimating indirect effects (see Dixon ments have been unavailable due to COVID-19 and appointments have been
et al., 2020; Walmsley et al., 2021a, 2021b). Moreover, the dynamic available but were avoided due to the risk of COVID infection.
3
Prolific, a widely accepted source of online participants for behavioral pre-pandemic activities. The only exceptions to this were two activities
research (Palan and Schitter, 2018; Peer et al., 2017). A sample of U.S. that did not require sustained presence in an indoor facility, namely to-
adults of just over 660 adult respondents was obtained in each wave, for go/delivery dining and outdoor recreational activities.
a total sample of N = 1328. Increases in shopping and dining substitution activities attributable
to COVID avoidance, over and above convenience considerations, or
mandated business closures, were also isolated and estimated in terms of
3.4. Estimating decrease in activities due to COVID-19 avoidance percentage increases in substitution activities. These substitution effects
are substantial, ranging from 23% to 30% for shopping activities to over
The sample of respondents who participated in paid work reported a 36% for the use of to-go and food-delivery dining alternatives, making
mean decrease of 1.25 days/week working outside the home during the up for some of the shopping and dining activity reductions attributable
pandemic due to all reasons, including avoiding exposure to COVID-19. to behavioral avoidance of COVID-19 during the pandemic.
The same sample of working respondents also reported a mean increase
of 0.86 days/week worked at home during the pandemic due to all
4. Trajectory of the pandemic under select intervention
reasons. The sample of respondents with school-age children reported a
scenarios
mean decrease of 2.02 days/week of in-person school attendance during
the pandemic due to all reasons, including parents’ decision to avoid
The U.S. started to screen for COVID-19 at select airports on January
children’s exposure to COVID-19.
20, 2020, and confirmed the first domestic case of the infection on
We estimated the impact of COVID-19 avoidance behavior on
January 21, 2020. A public health emergency was declared on February
health/medical and professional grooming visits in terms of the average
3, 2020, followed by a declaration by the WHO on March 11, 2020, of a
number of canceled or postponed appointments from November 2020
pandemic (American Journal of Managed Care, 2021).
through April 2021. We isolated the effects of behavioral avoidance of
COVID-19 from other effects, such as mandated closures. Respondents
indicated whether they had canceled or postponed three separate types 4.1. Scenarios
of medical-care visits and whether they had substituted telemedicine
visits for in-person visits during the pandemic. Respondents also indi We develop four COVID-19 pandemic scenarios in the U.S. between
cated the approximate number of medical visits avoided (or substituted) January 2020 and June 2022, with a benchmark scenario calibrated
and the primary reason for avoiding (or substituting) during this period. using reported COVID-19 deaths, and three scenarios with alternative
We focus on medical visits avoided due to behavioral avoidance of assumptions on the efficacy of interventions. Our estimates of SARS-
COVID, as opposed to other reasons, such as no insurance due to loss of CoV-2 transmission use a traditional Susceptible-Exposed-Infectious-
job or unavailability of in-person medical visits for whatever reason. Recovered (SEIR) compartmental model. We draw on estimates of dis
In order to calculate the mean number of health care visits avoided ease characteristics and mathematical models estimating the effective
per person due to COVID for those who utilized health care, we used the ness of select interventions and virus seasonality, referenced below.
following equation: Where empirical estimates were not available, we leveraged expert in
terviews to develop the most likely and realistic epidemiological sce
MVA = MVA|AE * p(AE|DV) * p(DV|UC) narios. Our model is described in detail in Hlávka et al. (forthcoming).
The key results of this model are reported in Tables A3, A4 and Figure A4
where, in Appendix A.
MVA = Mean number of health care visits canceled or not scheduled
to avoid COVID, 4.1.1. Scenario 1: real-world scenario
MVA|AE = Conditional mean number of health care visits canceled or In approximating real-world estimates, our model draws on data
not scheduled to avoid COVID for those who reported avoiding COVID published by the CDC until July 2021 (we calibrate it to approximate
exposure, mortality reported for the age bracket under-65-years and the age
p(AE|DV) = Proportion of those reporting decreased medical visits bracket 65-years and older in the U.S., using baseline modeling pa
who reported avoiding COVID exposure, rameters in Table 1 and transmission reduction ratios that result as
p(DV|UC) = Proportion of those utilizing health care who reported mortality estimates aligned with weekly CDC reporting) (CDC, 2021e).
decreased medical visits. The model makes projections through June 2022. Our calibration was
Avoidance of COVID-19 exposure during the pandemic (November conducted at weekly increments in 2020 and monthly increments
2020 through April 2021) was responsible for 0.73 fewer routine med thereafter. We assume that the reduction in the effective reproductive
ical visits, 0.26 fewer medical visits for non-life-threatening acute value attributed to behavioral interventions in July 2021 remains
problems, and 0.10 fewer visits for medical (diagnostic and treatment) consistent through June 2022, but we do not explicitly model new viral
procedures. Respondents’ desire to avoid exposure to COVID-19 strains that may increase compliance or decrease the effectiveness of
accounted for about 0.39 additional telemedicine visits substituted for behavioral and pharmaceutical interventions.5
in-person visits over six months of the pandemic.
The impacts of COVID-19 avoidance behavior across the six 4.1.2. Scenario 2: high-efficacy scenario
remaining activity categories were isolated and estimated in terms of We model a hypothetical high-efficacy scenario to indicate a com
percentage decrease during the pandemic using the same approach as bination of successful policies that would reduce the adjusted repro
described for medical/health appointments. Estimates are based on re duction number to under 1.0, which indicates suppression of
spondents who are engaged in each activity and are summarized in transmission over time. We consider effective disease management
Fig. 1, which plots the percentage of decreased activity. These per policies that other countries achieved through measures such as mask
centages isolate the effects of behavioral avoidance of COVID-19 from mandates, remote work, closure of non-essential businesses, contact
other effects, such as mandatory business closures and stay-at-home tracing, and quarantines (Brauner et al., 2021; Flaxman et al., 2020).
mandates. The bars represent the percentage decrease in activity dur
ing six months of the pandemic (November 2020 through April 2021)
compared to pre-pandemic (before March 2020) activity. Pure behav 5
Our calibration was conducted after seasonality trends (discussed below)
ioral avoidance effects, over and above business closures and other were taken into account, and was specific to the two age groups. Calibration
government mandates, resulted in a 40%–70% reduction in activities results, with cumulative intervention effectiveness estimates for each period in
during the pandemic (November 2020 through April 2021) compared to the two population cohorts, can be found in Appendix Figure A-3a/b/c/d.
4
Fig. 1. Summary of percentage decreases in activities across six domains during the pandemic compared to pre-pandemic attributable to behavioral avoidance
of covid.
4.1.3. Scenario 3a: very low-efficacy scenario and effects of pandemic outcomes on the behavioral response. Further
The very low-efficacy scenario assumes limited willingness of policy- details about expert input are provided in Section B1 of Appendix B.
makers to adopt public health interventions affecting social contact,
such as business closures. As a result, compliant behavioral response 4.2.2. Data and model inputs
leads to a maximum behavior-attributed reduction in transmission of Drawing on published literature as well as expert input, our pa
32% (based on Sharma et al., 2021). This reduction reduces the effective rameters and assumptions for SEIR and health outcome modeling are
reproductive number from 3.32 to 2.26, on average. Behavioral fatigue listed in Table 1.6
is also taken into account, and, over time, effectiveness is expected to
decrease (see Figure A-3c in Appendix A). 4.3. Scenario specification
4.1.4. Scenario 3b: low-efficacy scenario We present the number of cases of COVID-19 by age, period, and
In this scenario, we use the estimated effectiveness of mask use from scenario in Table 2. Other outcomes of interest are reported in Section
Sharma et al. (2021) in conjunction with the restriction of gatherings. B6 of Appendix B.
Scenario 3b uses 50% as the maximum reduction (in the initial months
of intervention) before declining due to behavioral fatigue (see Appen 4.3.1. Scenario 1: real-world scenario
dix Figure A-3d). Vaccination was incorporated into both the real-world In our real-world scenario, we estimate 142.6 million cases of
scenario and the high-efficacy scenarios. Data for vaccination was drawn COVID-19 by June 2021. Over the full 30-month period, 159.4 million
from the CDC (CDC, 2021f). In our modeling, 90% of individuals who infections are expected (23.6 million among 65+, 135.8 million among
were vaccinated were removed from the susceptible population <65). These cumulative infection numbers represent 43.5% and 49.5%,
permanently and moved to the vaccinated population (see Section B3 of respectively, of the initial susceptible populations in each age group.
Appendix B). These infections result in 910,000 deaths between January 2020 and
June 2022 (see Appendix A for more detail).
Notably, even with a relatively high number of cases and deaths, and
4.2. Inputs
vaccination willingness at 73.54% for the <65 population and 84.96%
for the 65+ population, our model predicts another wave of COVID-19
4.2.1. Expert interviews
deaths in Fall (2021)/Spring 2022 if behavioral non-pharmaceutical
We conducted 12 interviews with experts from variable back
grounds, including scientists in the field of public health and epidemi
ology from the United States, Canada, and the United Kingdom, state- 6
The CDC estimates an undercount of actual cases as a multiple of reported
and federal-level government institutions and clinicians. IRB approval
cases to be by a factor of approximately 4.6; hence, our model does not refer
was obtained, and honoraria were offered. These interviews covered ence confirmed infections to calibrate real-world outcomes (CDC, 2021c). For
multiple areas of interest to the research team, including specification of this reason, we use reported deaths as a source of calibration in Scenario 1.
interventions (social distancing, mask-wearing, and others), uncertainty Where multiple parameter sources were identified, we discussed our choice
in key parameters of interest (notably the infection fatality rate (IFR), with the experts consulted and chose estimates with the greatest degree of
seasonality, hospitalization rates, vaccination effectiveness, and others), support (or least disagreement) among the experts.
5
Table 1 group. These infections result in 65,000 deaths between January 2020
Modeling Parameters and Assumptions. and June 2022.
Parameter Value Source(s)
4.3.3. Scenario 3a: very low-efficacy scenario
Basic reproductive 3.32 Alimohamadi et al. (2020)
number (R0) Here we estimate 269.1 million cases of COVID-19 by June 2022.
Initial susceptible 274,165,495 (<65) U.S. Census Bureau (2019) These cumulative infection numbers represent 80.6% and 82.2%,
population 54,074,028 (65+) respectively, of the initial susceptible populations in each age group.
Initial infections on 0 Assumed These infections result in 1,993,000 deaths between January 2020 and
January 1, 2020
Daily infected 30 (January 2020) Calibrated based on real-
June 2022.
international arrivals, 45 (February 2020) world data
January and February 4.3.4. Scenario 3b: low-efficacy scenario
2020 Here we estimate 220.3 million cases of COVID-19 by June 2022.
Daily infected between 0 and 947 Calculated based on I-94
These cumulative infection numbers represent 67.4% and 67.1%,
international arrivals, Visitor Arrival Program;
March 2020 through Bureau of Transportation respectively, of the initial susceptible populations in each age group.
June 2022 Statistics 2019–2020 ( These infections result in 1,504,000 deaths between January 2020 and
Bureau of Transportation June 2022.
Statistics, 2021) Achieving the most optimistic outcomes would require a coordinated
Latent period (pre- 2.5 days Vardavas et al. (2021); Rhee
infectious) et al. (2021)
national response from early on in the pandemic (in our model, we
Infectious period 7.5 days CDC (2021b); Rhee et al. assumed most interventions would be in place by April 2020, consisting
(asymptomatic, pre- (2021) of measures such as broad testing, quarantines, isolation, social
symptomatic and distancing, and remote work) so that any further fluctuations in inci
symptomatic)
dence would not result in exponential growth, which was observed in
Hospitalization rate (h) 2.90% (<65) CDC (2021c)
21.21% (65+) the real world. Given insights from the pandemic responses of other
Age-specific infection 0.0969% (<65) O’Driscoll et al. (2021) countries, it is reasonable to contend that better management of the
fatality rate (IFR) 3.3049% (65+) pandemic could have saved hundreds of thousands of lives in the U.S.,
Vaccine effectiveness (VE) 90% CDC (2021a) particularly among the elderly (Brauner et al., 2021; Sharma et al.,
Proportion of population 73.54% (<65) Kapteyn and Gutsche (2021)
2021).
willing to vaccinate 84.96% (65+) weighted by American
Community Survey (U.S. Our analysis has several limitations. Notably, SEIR modeling as
Census Bureau, 2019) sumes homogenous mixing of the population with no specific modeling
IFR Multiplier during peak Under 75,000 Based on Rossman et al. of local outbreaks (Tolles and Luong, 2020). We aim to address the
hospitalization periods hospitalizations: 1.00 (2021)
different dynamics for younger lower-risk individuals, and older
Over 75,000
hospitalizationsa: higher-risk individuals by utilizing two different susceptible population
1.20 pools. Moreover, we adjust for temporal variability by introducing a
Over 125,000 seasonality coefficient, but the seasonal estimates we draw on are not
hospitalizationsb: specific to the United States. We also do not model other health out
1.30
comes – it is yet to be determined what the short- and long-term con
Seasonality adjustment 0.75–1.27 The effective reproductive
coefficient rate is a factor of the basic sequences of deferred health care will be. Another limitation includes
reproductive number and the the dependence on fixed parameters in the initial model design. We
seasonality coefficient. conducted expert interviews to collect independent input to key model
Based on Gavenčiak et al.
design choices. Finally, we draw on external estimates, including the
(2021), see Appendix 5.A.6
expected effectiveness of social distancing, which also contains uncer
a
Based on the onset of highest hospitalization counts in Fall (2020) and tainty and variability over time, and we finalize our disease modeling
Summer 2021, which resulted in local shortages of intensive care beds and inputs in June 2021, before data about the more infectious Delta
personnel. (B.1.617.2) and Omicron (B.1.1.529) variant were documented. As a
b
Based on the reported peak of hospitalizations when many states were
result, our results should be interpreted as approximations of possible
running out of intensive care beds and personnel to provide the highest-quality
disease dynamics rather than accurate estimates for each scenario we
care.
study.
interventions continue unchanged from July 2021 onwards.

5. Data on major drivers of economic consequences and fiscal
4.3.2. Scenario 2: high-efficacy scenario stimulus
For this scenario, we estimate 21.1 million cases of COVID-19 by
June 2022. These cumulative infection numbers represent 2.6% and We collected data for some of the basic drivers of the economic
7.2%, respectively, of the initial susceptible populations in each age consequences of the COVID-19 pandemic from various secondary
sources. These include federal and state government agency websites on
Table 2
Age-Stratified COVID-19 Cases in Each 6 Months (in thousands).
Cases Age under 65 Cases Age 65 or Over
Scenario: 1 2 3a 3b 1 2 3a 3b
H1/2020 30,531 6564 209,178 134,521 3430 617 36,930 18,575
H2/2020 53,606 2143 15,611 47,298 6896 237 6571 17,200
H1/2021 43,923 3900 354 1505 4178 298 40 622
H2/2021 4433 1699 266 376 1834 92 27 36
H1/2022 3347 5455 91 198 7228 139 10 18
Total 135,840 19,761 225,500 183,897 23,565 1383 43,578 36,451
Sums of semi-annual periods may not equal total due to rounding.
6
the status of mandatory closures/reopenings, CDC reports and other Table 3

health publications, U.S. Bureau of Labor Statistics (BLS) survey results Magnitude of Avoidance Behaviors and CGE Modeling Method.
on telework, and foot traffic and credit card spending data for pent-up Avoidance Behavior GTAP CGE Modeling Linkage Impacts on the
demand estimation. In this section, we summarize the collection of GTAP Sector(s)
these data and their refinement and translation into CGE model inputs. Staying home from work Labor force productivity impact − 4.58%
Keeping children from Reduced demand in Education − 1.59%
5.1. Mandatory shutdown and reopening process school (education sector sector
impact)
Reduction of in-person Labor force impact − 2.71%
During the initial outbreak of the coronavirus disease in the U.S. in school attendance
2020, 45 states plus D.C. implemented “stay-at-home” orders that also (caregiver impact)
required the shut-down of non-essential businesses. In most states, the Avoiding medical Demand reduction in Human − 29.16%
orders were issued in March and lifted by the end of May or early June, professionals Health and Social Work sector
Reducing shopping Demand reduction in Wholesale − 5.85%
with an average length of 45 days (Wu et al., 2020; New York Times,
and Retail Trade sector
2021). To determine the impacts of the mandatory closures on various Avoiding local leisure Demand reduction in Recreation − 21.17%
economic sectors, we defined three categories of sectors (Entirely activities & Other Services sector
Non-Essential; Partially Non-Essential; and Essential) based on the DHS Avoiding dining out Demand reduction in − 26.50%
Accommodation, Food and
Cybersecurity and Infrastructure Security Agency list of Essential Crit
Service Activities sector
ical Infrastructure Sectors during COVID-19 (CISA, 2020). Avoiding public Demand reduction in Land − 4.21%
To estimate the reopening process by sector between June and transportation Transport and Transport via
September 2020, detailed data on reopening stages and timelines were Pipelines sector
collected from the reopening plans issued in five major states: California, Canceling air travel Demand reduction in Air − 57.48%
Transport sector
Texas, New York, Illinois, and Florida (Ting and Duree, 2020; Cowan
Demand reduction in − 9.67%
and Arora, 2021; Florida Department of Health, 2021; Office of the Accommodation, Food and
Texas Governor, 2021; State of California, 2021; State of Illinois, 2021; Service Activities sector
State of New York, 2021). We also collected data on the reopening status
for each state at three additional points in time: September and
December 2020, and March 2021.7
billion over the entire study period, or about 8.35% of the total annual
Telework has been one of the most important resilience tactics dur
gross output of the Health Care and Social Service sector. The impact is
ing the mandatory closures and the phased-in reopening process. The
0.78%, 14.23%, and 11.70% for Scenarios 2, 3a, and 3b, respectively.
data on telework potential (i.e., the percentage of workers in a specific
The detailed results are presented in Appendix Table B-3.
sector that have teleworked or worked from home) by sector and by
We also estimate lost workdays due to COVID illness and deaths and
month post-COVID-19 were collected from U.S. Bureau of Labor Sta
caring for sick family members. For hospitalized patients, this is calcu
tistics (2021) survey results. The weighted average telework potential
lated by adding the average length of illness onset to hospitalization,
across economic sectors was over 40% at the beginning of the pandemic
hospital stay by age group, and time between hospital discharge and
and reduced to about 30% as the economy gradually reopened. Tele
returning to work/school (Fusco et al., 2021; Chen et al., 2020; Zhao
work potentials ranged from about 8% for Leisure and Hospitality sec
et al., 2020; Walmsley et al., 2021). For outpatients, productivity losses
tors to over 70% for the Financial and Education sectors during
are assumed to be 1.5, 1.9, and 5.3 days, respectively, for the three age
mandatory closures (BLS, 2021). Appendix Table B-1 presents the esti
groups (Prager et al., 2017). However, we assume that patients of all age
mated direct percentage reduction in U.S. annual GDP (after telework
groups spend 10 days “sick at home” given the CDC isolation guidelines,
adjustments) by sector due to mandatory closures and the phased-in
while adjusting for telework potential (23.7% economy-wide) for the
reopening process by 6-month period. The estimates for other coun
20–64 age group to estimate workday losses. Appendix Table B4 sum
tries are also discussed in Appendix B.
marizes per patient loss of productivity measured in days by age and
health outcome category.
5.2. COVID-19 health expenditures and workday losses
Lost productivity due to caring for sick family members includes
caring for sick children in the 0–18 age group, a sick spouse in the 18–64
The health outcomes of COVID-19 in terms of the number of out
age group, and sick elderly family members in the 65+ age group. We
patients, hospitalizations, and deaths are translated into total COVID
made similar assumptions as in Prager et al. (2017) and Dixon et al.
health expenditures by using the average per-patient cost by health
(2010) in calculating the productivity day losses for this category. For
outcome category and by age group (see Appendix Table B-2) (Bartsch
the Base Case scenario, the total estimated workday losses are over 600
et al., 2020; Fusco et al., 2021). For the base case scenario, the total
million days. Appendix Table B-5 presents total lost productivity for
estimated COVID-related health expenditures are estimated to be $214
each scenario.
For other countries, workday losses were assumed to occur at the
7 same rate as in the U.S. Similarly, for health care expenditures, an
By mid-September 2020, 23 states had reopened, seven states kept with
adjustment was made to the cost of health care based on differences in
their original reopening schedules, 11 states paused the reopening process, and
the remaining 10 states reversed their reopening plans, especially for bars, per capita health care expenditure in each country.
restaurants, and indoor entertainment activities. As the winter outbreak began
in November 2020, more states reversed the reopening of the economy. These
winter reversals generally lasted 15–60 days across the states. By mid-March 5.3. Avoidance behaviors
2021, many states were still implementing capacity limitations for indoor
dining and indoor/outdoor activities in entertainment venues (Bunis and Our survey results on various types of avoidance behavior are
Rough, 2021; Schoening and Wilcox, 2021). Therefore, for the first semester of translated into direct production impacts in the relevant GTAP sectors.
2021, disruptions to production activities were only calculated for the Food In most cases, we multiply the percentage net decrease of a specific type
Services and Recreation sectors. The percentage restrictions data for these of activity because of avoidance behavior by the percentage that the
sectors collected in March were assumed to determine the direct output dis
ruptions in the relevant sectors for the first three months in 2021, and half of
those levels were assumed for the following three months.
7
Table 4
Impacts on Semi-annual U.S.GDP (billions of dollars, unless otherwise specified).
2020_1 2020_2 2021_1 2021_2 2022_1 2022_2 2023_1 2023_2
Difference (% change) − 27.5 − 21.6 − 22.3 − 12.4 − 13.7 − 10.8 − 8.8 − 6.5
Baseline 10,909 11,104 11,292 11,480 11,645 11,810 11,965 12,120
Policy 7898 8705 8774 10,057 10,050 10,534 10,912 11,332
Difference in Semi-annual GDP − 3011 − 2398 − 2518 − 1424 − 1595 − 1275 − 1053 − 788
activity represents of the total output in the relevant GTAP sector (see equilibrium model to examine the impact of COVID-19 on the U.S.,
Walmsley et al., 2021 for more discussion on the translation of survey China, and the rest of the world.8 The model is based on the publicly
results to CGE model inputs). Table 3 first presents the linkage that is available Dynamic GTAP model (Ianchovichina and Walmsley, 2012),
used to analyze the impacts of various types of avoidance behavior in the which is a dynamic adaptation of the widely used GTAP model (Hertel
CGE model and then summarizes the direct impact inputs to the corre et al., 1997; Corong et al., 2017).9 The model is further adapted to
sponding GTAP sectors.. incorporate supply chains based on Walmsley and Minor (2016a,
2016b).10 Current and earlier versions of the model have been used in
5.4. Pent-up demand numerous studies (Hertel et al., 2014; Walmsley et al., 2014, 2021a,
2021b; Walmsley and Minor, 2020a, 2020b, 2021; Rose et al., 2021). In
Pent-up demand represents another important source of economic the description below and in Appendix D, we focus on a few key dif
resilience that helps reduce the negative impacts from shutdowns and ferences between this model and the GTAP model.
individual avoidance behaviors during the pandemic. To estimate the In the model, in each region, personal income is received by
changes in consumer demand for key types of goods and services over households supplying factors of production, and business and personal
time because of COVID-19, we first estimate the “Lowest Point” level in tax revenues are collected by a regional household. This income is then
consumption since the onset of COVID-19. For most consumption cate allocated to private C and government G consumption, and to savings S
gories, this “Lowest Point” took place in early or mid-April 2020. Next, which fund investment, using a Cobb-Douglas demand function:
the percentage increase from the “Lowest Point” level for each category U = Cα .Gβ .Sγ (1)
is estimated at five points in time with three-month intervals. The esti
mates are presented in Appendix Table B-6, calculated based on micro- where: U is the total utility for the region; and.
level data from three distinct sources that track consumer credit card- α, β, γ are distribution (shares) parameters.
spending information or foot traffic data at retail locations across Changes in savings rates caused by the pandemic and to government
different industries (Opportunity Insights, 2021; Unacast, 2021; Safe spending due to the fiscal stimulus are modeled through the changes in
Graph, 2021). these distribution parameters (α, β, γ)11
Factors influencing consumer expenditures during the pandemic Private consumption is then allocated across commodities using
include, but are not limited to, closures and reopenings of businesses, constant difference elasticity (CDE)12
government stimulus paychecks, consumer avoidance behavior, and ( )Υ i
pent-up demand. It is difficult to collect data to separate the effects of 1=
∑
Bi .UP Υ i .Ri .
Pi
(2)
these individual factors. Therefore, we first simulate the actual changes i
C
in consumption using the data presented in Table B-6. Next we compare
the model output with the results of simulations in which several other Where: UP is the utility associated with private expenditure (C);
key factors are incorporated (including closures/reopenings, avoidance, Pi is the price of commodity i;
and fiscal policy), and then attribute any positive differences to the ef Bi are the distribution parameters of commodity i; and
fects of pent-up demand. Appendix D presents more details of the Υ i and Ri are the substitution and expansion parameters of com
method used. Table D-6 in Appendix D shows the actual shocks given to modity i.
private household demand. As in the case of savings and government spending, commodity-
5.5. U.S. Federal government fiscal stimulus legislation

8
The underlying database contains input-output tables and trading relations
The U.S. federal government enacted six stimulus bills related to for 65 commodities and 141 countries from the GTAP database (Aguiar et al.,
COVID-19 from March 2020 to March 2021. Altogether, the six bills 2019), as well as additional detail on the source of final and intermediate goods
based on HS6 trade data. We aggregate the 141 countries/regions (GTAP,
amount to an estimated $5.13 trillion in assistance, forgivable and
2021a) into three regions – the U.S., China, and the ROW – as we are primarily
subsidized loans, funding support for state and local government, tax
interested in the impact on the U.S. economy but also recognize the need to
credits, and government expenditures (CBO, 2021a). We break down model the impact of the pandemic on trade with the rest of the world and hence
each bill into several provisions. The cost of each provision was based on supply chains.
the text of the bill or projections by the Congressional Budget Office 9
The model is implemented in GEMPACK (Horridge et al., 2018).
(CBO). Cash payments to individuals and enhanced unemployment in 10
This feature improves our ability to examine how the delay or disruption of
surance benefits were assumed to benefit households. Other provisions these imported intermediate inputs impact a U.S. firm’s ability to produce and
were matched to the most appropriate GTAP sector. For most stimulus export commodities. For instance, to the extent that intermediate inputs come
provisions, we assume the federal government spends the stimulus funds from China, rather than from the rest of the world, the supply-chain effects of
over time rather than at once. Appendix C details how fiscal stimulus COVID would be reduced because China’s mandatory closures were relatively
provisions are incorporated into the model. For further detailed analysis less severe. These supply-chain disruptions are significant in some cases.
Although not a focal concern in our paper, it was important to capture the
of the direct and general equilibrium impacts of the fiscal stimulus
simultaneous slowdown of China and the rest of the world that occurred over
packages, see Walmsley et al. (2022b).
this period in the global model.
11
dppriv, dpgov and dpsave in the standard GTAP model, see Appendix D for
6. The CGE model further details on how these were used.
12
The CDE is a flexible non-homothetic functional form developed by Hanoch
We refine a dynamic global supply-chain computable general (1975).
8
Table 5
Percent Changes in Semi-annual U.S. GDP by Causal Effect (cumulative percent differences from baseline).
2020_1 2020_2 2021_1 2021_2 2022_1 2022_2 2023_1 2023_2
Mandatory Closures − 26.3 − 22.9 − 21.7 − 15.9 − 12.3 − 10.3 − 8.9 − 7.8
Avoidance − 12.2 − 11.3 − 10.2 − 5.4 − 4.6 − 4.1 − 3.8 − 3.6
Deaths and Illness 0.0 − 0.1 − 0.3 − 0.5 − 0.6 − 0.7 − 0.8 − 0.8
Health Care 0.8 0.9 0.8 0.7 0.6 0.5 0.5 0.4
Pent-up Demand 3.1 2.9 5.0 5.4 6.1 5.8 6.2 6.9
Fiscal Policy
Rounds 1–4 7.1 8.9 2.1 1.9 1.2 1.4 1.4 1.6
Round 5 0.0 0.0 1.7 1.4 0.2 0.2 0.1 0.1
Round 6 0.0 0.0 0.3 0.0 − 4.3 − 3.6 − 3.5 − 3.3
Totals − 27.6 − 21.6 − 22.3 − 12.4 − 13.7 − 10.8 − 8.8 − 6.5
specific distribution parameters can be used to incorporate changes in /

private consumption of commodity i. This is done by incorporating the − 1
(3)
− ρ − ρ ρ
Qi = (Di + Mi )
distribution parameter variables as changes in relative willingness to
pay (i.e., like prices) giving the following demand function (as it appears Where: Qi is demand for commodity i by private final consumers;
in the model code).13 Di is demand for the domestic commodity i by private final
qp(i,r) - pop(r) = sum(k, TRAD_COMM, EP(i,k,r) * pp(k,r)) + EY(i,r) * consumers;
[yp(r) - pop(r)] Mi is demand for the imported commodity i by private final con
sumers; and
- sum(k, TRAD_COMM, EP(i,k,r) * [dpp_agg(MAPTC2TCA(k),r) - ρ is the CES substitution parameter (which also differs by commodity
dppall_agg(r)]) i).
- sum(k, TRAD_COMM, EP(i,k,r) * [dpp_stop(k,r) - dppall_stop(r)]) At the second level:
( )−
where: qp(i,r) is private consumption of commodity i in region r;
1
∑ /ρ
(4)
M
ρM
Mi = Mi,r −
pop(r) is population; r
EP(i,k,r) are the cross-price elasticities between commodities i and k

Where: Mi,r is demand for the commodity i imported from region r by
in region r;
final consumers14; and
pp(k,r) is the composite price of commodity i in region r, for private ρM is the CES substitution parameter (which also differs by com
household consumption; modity i).
Given the demand for their goods by domestic and foreign agents,
EY(i,r) is the income elasticity for commodity i, in region r;
firms then produce these goods by combining intermediate inputs and
yp(r) is private consumption expenditure in region r; value-added according to a Leontief (fixed proportion) relationship.15
Intermediate demand for commodity i is then sourced domestically or
dpp_agg(a,r) is the distribution parameter for essentials (/non-es
imported, and then allocated across foreign sources using a series of CES
sentials) in region r;
functions similar to equations (3) and (4). We also add distribution
dppall_agg(r) is the average of dpp_agg(a,r); parameters to intermediate demand and government consumption to
incorporate avoidance, increased demand for health care, pent-up de
dpp_stop(k,r) is the distribution parameter for commodity i, in region
mand and even fiscal policy, using the techniques outlined in Dixon and
r; and
Rimmer (2002) and Walmsley and Minor (2020b).
dppall_stop(r) is the average of dpp_stop(i,r). Demand for factors of production is determined using a CES pro
duction relationship of value-added.
We allow for two changes in willingness to pay, the first is related to
( )−
our assumption that demand for essentials is fixed (dpp_agg
1
∑ /ρ
(5)
E
(MAPTC2TCA(k),r)). The second is commodity specific (dpp_stop(k,r))
ρE
VAi = Fe,i −
and is used for avoidance and later health care costs and pent-up de f
mand. For more details on incorporating willingness to pay (distribution

Where: VAi is demand for value-added in production of commodity i;
parameters) into a CGE model (see Walmsley and Minor (2020b) and
Fe,i is demand for factor e in production of commodity i; and
Dixon and Rimmer (2002)). Private consumption of commodity i is then
ρE is the CES substitution parameter (which also differs by com
allocated across domestic and foreign sources (Equation (3)) and foreign
modity i).
sources (Equation (4)) using a series of nested Armington Constant
With the mandatory closure of non-essential businesses, production
Elasticity of Substitution (CES) functions that characterize imports as
imperfect substitutes for domestic goods. At the first level:
14
Since the model has been adapted to trace global supply chains based on
Walmsley and Minor (2016a, 2016b), the sourcing of imports for final con
13 sumers, investment purposes and firms’ demand for intermediate inputs are
Any change in one commodity’s willingness to pay will therefore impact
identified separately using distinct CES functions. This is not the case in the
demand for all goods depending on their cross-price elasticities with that
standard GTAP model, where imports by final consumers and firms are first
commodity, just like a change in actual prices does. This approach is consistent
aggregated, before foreign sourcing is determined using the CES function.
with the way willingness to pay is derived for the CES function in Walmsley and 15
We also examined COVID-19 impacts using a CES function at this level with
Minor (2020b), where the elasticity is also relevant. The distribution parame
small elasticities and found that the results were not significantly different.
ters must change relative to an average so as to ensure that income allocated to
private consumption equals the weighted sum of private expenditures by
commodity.
9
declines. This is achieved through an endogenous “phantom tax,“16 not important since we are examining the short run impacts of the
which raises prices, leading consumers and essential businesses to either pandemic.
reduce demand for these goods or purchase these goods from other Since the model is dynamic, a baseline scenario of how the world
(foreign) sources, where mandatory closures are less severe (equations economy was expected to change without the pandemic must be
(3) and (4)). One of the main benefits of a general equilibrium model is established. To build this baseline scenario, we use historical and pre-
its focus on the allocation of scarce factors of production across sectors. COVID forecasts from the Bureau of Economic Analysis for the U.S.
First, demand for factors (determined by Equation (5)) must equal factor and the International Monetary Fund’s World Economic Outlook (IMF,
supply (FSe )17 2019) for real gross domestic product (GDP), investment, and labor;
∑ United Nations (UN, 2017) data on population growth to update the
FSe = Fe,i (6) 2014 GTAP data to the beginning of 2020 and create a baseline for
i
2020_1 to 2023_2 (in semi-annual periods). The baseline scenario be
The supply of factors (FSe ) depends on exogenous changes in the tween 2020_1 and 2023_2 reflects what the global economy would have
supply of factors (FXe ), such as deaths and illness caused by the looked like if the pandemic had not occurred.
pandemic, and the rate of unemployment (URatee ): See Appendix D for explanations of how the model was applied to
FSe = FXe .(1 − URatee ) (7) each of the causal factors.
The unemployment rate is determined endogenously through an 7. Results

inequality. If changes in demand and supply of labor cause wages to rise,
then the equilibrium wage We rises, and unemployment is permitted to The model described in Section 6 estimates the macroeconomic im
gradually fall back towards the natural rate; otherwise, wages remain pacts of the COVID-19 pandemic on the U.S. economy based on the
unchanged (̂ W e = 0, where ̂W e is the proportionate change in the “bottom-up” economic consequence analysis framework presented in
equilibrium wage We ) and unemployment increases endogenously.18 Section 1. This enables us to isolate the effect of individual causal factors
This approach has been added to the model and is based on an approach (“drivers”) of these consequences.
documented in Walmsley and Strutt (2011) and also similar to that used Fig. 2 presents the time-path of the estimated U.S. GDP over the eight
in Dixon and Rimmer (2011). This means that when businesses close semi-annual periods between 2020 and 2023 (i.e., cumulative GDP
during the pandemic and demand for labor falls, wages are assumed to growth in six-month periods) in the baseline and with the pandemic.19
be sticky downwards, and hence any decline in demand for labor causes The corresponding estimates in billions of dollars of GDP in the baseline
increased unemployment. In later periods, when businesses reopen and during the pandemic, and the cumulative difference between the base
demand for labor increases again, wages rise and unemployment falls. line and pandemic (in both percentage and dollars terms) are given in
We also allow for the unemployment/under-utilization of other re Table 4. In the first six months of the pandemic, mandatory closures,
sources, such as capital and land. As production falls, capital and land avoidance, and deaths and illness caused a significant decline in the
lay idle until businesses reopen and these resources are re-deployed. semi-annual real GDP of approximately 39%. With the introduction of
The pandemic has had a profound impact on both the supply and the first four rounds of fiscal stimulus, increased healthcare expendi
demand of factors of production. Deaths, illness, and the avoidance of tures, and increased (pent-up demand) consumer spending as businesses
work have led to an exogenous reduction in the supply of workers were allowed to re-open, this decline was reduced to the total decline of
(FSXe ), while mandatory closures and avoidance of goods and services, 27.6% shown in Fig. 2. Growth rose in late 2020 as businesses continued
as well as the general decline in production, have reduced demand for all to reopen, but dipped again slightly in early 2021 with the re-
factors of production (Fe,i ). The general equilibrium model is therefore introduction of some mandatory business closures and further avoid
an ideal tool for analyzing the economic impact of the pandemic. ance in response to another wave. Over time, the reopening of busi
The model is also dynamic, allowing us to examine the impact of nesses, the decline of avoidance behaviors, and pent-up demand have
COVID over eight semi-annual periods (2020_1, 2020_2, …, 2023_2). resulted in a gradual crawl back toward baseline growth. The second dip
The dynamic model also incorporates investment behavior through in the first half of 2022 corresponds to the later stages of Round 6 of the
adaptive expectations that allow for the gradual equalization of global fiscal stimulus, which is found to crowd out investment and exports,
rates of return over time, and additional accounting relations to keep leading to a decline in growth. But in the second half of 2022, the gap
track of foreign ownership of capital based on the GDyn model (Ian starts to diminish again, and by the end of 2023, the semi-annual gap
chovichina and Walmsley, 2012), although many of these features are between economic growth under the pandemic and baseline growth is
just under $800 billion.
Table 5 presents the decomposition of the gap between the pandemic
16
outcome and the baseline into the various contributing factors. The
The reduction in output reflecting the business closures is fixed, and the
largest contributing factor is mandatory business closures, followed by
implied tax required to achieve that level of production is determined
avoidance. The mandatory business closures were most prevalent in the
(endogenously) by the model Dixon and Rimmer (2002). The term “phantom” is
simply a modeling device because the “taxes” are implicitly returned to the
first half of 2020, with restrictions partly lifted in the second half.
businesses as revenue increases associated with the higher price; essentially, the Additional closures in the first half of 2021 caused a further slowing of
customers (both other businesses and consumers) cover this revenue by their the recovery. In addition to mandatory closures, the avoidance of in-
expenditures at the higher price, and there is no effect on government revenues.
17
The model includes eight factors of production: five labor types by occu
pation (officials, managers, and professionals; technicians and associate pro
19
fessionals; clerks; service/shop workers; and agricultural and unskilled We refer to the time-path as cumulative change because we are cumulating
workers), as well as capital, land, and natural resources. We also capture the growth over time. For instance, in the baseline, growth is just under 2% per
supply of labor by education, which we link to our five occupations using in year. The time-path therefore shows how this 2% cumulates over time, such
formation on the education levels of each occupation by country. that in year 1, the economy has grown by 2%; in year 2, the economy has grown
18
This construction is similar to the Keynesian Closure Rule, which holds by 4% (or [1.02]2–1); in year 3, cumulative growth is around 6% ([1.02]3–1),
wages constant and allows for unemployment in the labor market. In our and so forth. Fig. 2 therefore shows the cumulation of the annual growth rates
approach, if wages want to rise they are permitted to do so, but if equilibrium under the two scenarios: baseline and COVID pandemic. In the rest of this
suggests wages need to fall, then they are not permitted to do so, instead un section we show the results in terms of the difference or gap between those two
employment rises. Actually, this downward “stickiness” of wages is more cumulative time-paths; this gap is referred to as the cumulative difference from
consistent with the Keynesian approach. baseline.
10
Fig. 2. Percent Changes in Semi-annual GDP by Causal Factor. (cumulative percent change over time).
person shopping for goods and services and of the workplace also businesses, and services, in particular, tend to be more labor-intensive
contributed significantly to the decline in GDP. The decline in labor due and hence have a greater impact on labor than other factors of pro
to illness and deaths of workers was relatively small due to the low duction, such as capital.
percentage of workers impacted and the availability of other workers With deaths and illness, the supply of labor declines. Those left un
due to the high levels of unemployment. The small decline in real GDP employed as a result of the mandatory closures and avoidance fill these
here is due to the decline in population and demand rather than the vacant positions, causing unemployment to fall slightly. Similarly, with
decline in the labor force. avoidance, there is also a decline in labor supply as some employees
The remaining factors tended to alleviate the losses in economic avoid going to work for fear of unsafe working conditions, or the need to
growth. Increased demand on the health care sector to treat COVID stay home to take care of children or household members in need of care.
patients had positive implications for other sectors, albeit small. Pent-up Overall, however, unemployment still rises with avoidance as the
demand was found to be an important factor in the recovery, raising real decline in production and demand for labor resulting from the avoid
GDP in the first half of 2020 by 3% and by a further 2% in the first half of ance of non-essential goods and services is greater than the fall in the
2021, which then continued to boost growth due to a rise in investment. supply of labor due to avoidance of work. The fall in labor supply due to
Pent-up demand in the second half of 2020 was found to be relatively deaths, illnesses, and avoidance of work also leads to a shift towards
small but increased again in early 2021. It is worth noting that we only capital that has implications for investment, discussed below. Increased
capture pent-up demand in 2020 and the first part of 2021, although it is health care expenditures, pent-up demand, and Rounds 1–5 of the fiscal
likely that there is further pent-up demand in the latter part of 2021 and stimulus also raise the demand for labor.
perhaps even into 2022. Hence, this is likely to be an underestimate of The impact on investment (Table 7) is generally consistent with the
the longer-run impact of all pent-up demand. impacts on real GDP. There are a few notable exceptions: avoidance and
The fiscal stimulus was also found to positively impact the economy, fiscal stimulus (round 6). Avoidance by workers raises investment
particularly when first implemented. Rounds 1–4 had the greatest because the decrease in the supply of labor raises the use of capital (e.g.,
impact, alleviating the decline in growth at its most severe stages. Round increased automation). Increased demand for capital increases returns
5 provided further relief in 2021, while round 6 was found not to be to capital and hence investment. Investment then adds to capital stocks
beneficial for economic growth, in large part because it was becoming over time, and so increases in investment increase growth in real GDP in
harder to fund the fiscal stimulus using domestic savings.20 the following period. Similarly, declines in investment result in a decline
With the decline in production due to mandatory business closures in growth in real GDP in the following period.
and avoidance, employment of all factors declined, with the largest The different impacts of the various rounds of the fiscal stimulus on
declines due to the mandatory closure of businesses (Table 6). The investment reinforce the results in real GDP from the various fiscal
decline in labor is particularly large, with unemployment rising slightly stimulus rounds. Rounds 1–4 cause investment to increase, while in
more than GDP in percentage terms. This is because non-essential Round 6 investment decreases, resulting in declining growth in real GDP
in 2022 and beyond. This decrease in investment in Round 6 is caused by
government spending crowding it out. This crowding out is exacerbated
in Round 6 because much of its spending is implemented in late 2021,
20
In the first year after the pandemic, savings rates rose as mandatory closures just as savings rates are returning to normal. In 2020, as Rounds 1–4 of
and avoidance reduced private consumption. By the second year, however, the fiscal stimulus are implemented, savings rates rise as people could
savings rates were falling as businesses reopened and consumers increased not spend their money due to business closures and avoidance. This rise
purchases due to pent-up demand. In the early rounds of the fiscal stimulus, in savings provided the government with sufficient funds to stimulate
domestic savings were abundant and easy to access leading to a rise in GDP; but
the economy without significant crowding out of exports and invest
as domestic savings rates fell in the second year, the later rounds of the fiscal
ment. By late 2021, however, businesses are projected to be open, and
stimulus had to be funded from foreign savings. With increased demand for
foreign savings to fund the fiscal stimulus, the trade balance deteriorates, prices
savings rates have fallen; savings are therefore scarcer, and foreign
rise (i.e., real appreciation) and exports and investment decline. savings must be used to fund Round 6 of the fiscal stimulus, which has
11
Table 6
Percent Changes in Semi-annual U.S. Employment by Causal Effect (cumulative percent differences from baseline).
2020_1 2020_2 2021_1 2021_2 2022_1 2022_2 2023_1 2023_2
Avoidance − 11.7 − 8.9 − 6.8 − 4.7 − 3.4 − 2.3 − 1.7 − 1.3
Deaths and illness 0.1 0.7 1.1 0.7 0.5 0.9 1.1 1.1
Health Care 0.1 0.3 0.0 0.0 0.0 0.0 0.1 0.1
Pent-up Demand 2.1 0.4 6.1 9.4 5.4 3.9 4.1 5.0
Fiscal Policy
Rounds 1-4 12.0 12.0 1.0 0.7 0.1 0.1 0.1 0.2
Round 5 0.0 0.0 2.2 1.5 0.2 0.1 − 0.1 − 0.2
Round 6 0.0 0.0 0.4 0.3 − 4.7 − 3.5 − 3.3 − 3.0
Totals − 25.4 − 19.0 − 17.2 − 7.7 − 13.1 − 9.6 − 6.9 − 3.9
Table 7
Percent Changes in Semi-annual U.S. Investment by Causal Effect (cumulative percent differences from baseline).
2020_1 2020_2 2021_1 2021_2 2022_1 2022_2 2023_1 2023_2
Avoidance 1.3 0.1 − 6.5 − 7.7 − 5.4 − 4.6 − 4.0 − 3.5
Deaths and Illnesses 0.1 2.4 3.9 3.5 1.7 2.7 3.1 3.2
Health Care − 0.1 − 0.6 − 1.5 − 1.0 − 0.7 − 0.6 − 0.4 − 0.3
Pent-up Demand − 0.7 0.8 2.4 1.2 6.7 10.1 13.9 18.3
Fiscal Policy
Rounds 1-4 5.1 5.0 6.0 8.5 12.4 12.9 13.4 13.4
Round 5 0.0 0.0 1.4 1.1 1.6 0.9 0.6 0.2
Round 6 0.0 0.0 − 0.1 − 6.9 − 1.1 − 1.4 − 1.4 − 1.5
Totals − 16.8 − 19.1 − 20.3 − 17.6 6.2 13.6 20.7 26.8
Table 8
Percent Changes in Semi-annual Real GDP Due to Deaths and Illnesses and Health Care Expenses under the Alternative Scenarios, (cumulative percent differences from
baseline).
Scenario 2020_1 2020_2 2021_1 2021_2 2022_1 2022_2 2023_1 2023_2
Scenario 1
Deaths and Illnesses 0.0 − 0.1 − 0.3 − 0.5 − 0.6 − 0.7 − 0.8 − 0.8
Health care expenses 0.8 0.9 0.8 0.7 0.6 0.5 0.5 0.4
Scenario 2
Deaths and Illnesses 0.0 0.0 − 0.1 − 0.1 − 0.2 − 0.2 − 0.2 − 0.2
Scenario 3a
Scenario 3b
implications for the trade balance and trade (see Walmsley et al., 2021). 8. Discussion
Appendix Figure E− 1 shows the impact of the various causal factors
on sectoral production in the first half of 2020. As expected, mandatory 8.1. Impact of alternative scenarios
closure of businesses causes most of the declines in production, followed
by avoidance. These declines are most significant for the non-essential In Table 8, we show how changes in our assumptions about the
sectors, although there are clear indirect implications for essential sec number of deaths and illnesses, and the resulting impact on the health
tors too, as incomes fall and non-essential businesses reduce their de sector, impact the economy. These are compared with Scenario 1. The
mand for intermediate inputs (e.g., pharmaceuticals used in health results show that increased efficacy of interventions (Scenario 2) re
care). The impact of avoidance behavior in accommodation and food duces the impact of the deaths and illnesses and health care expenses on
services, recreational services, transportation, and health care on pro the economy substantially. In Scenarios 3a and 3b, lower efficacy means
duction is also clear. We also see a reflection of some pent-up demand in that the impacts are larger in absolute terms, with deaths and illnesses
the first half of 2020, as people eager to enjoy restaurants increase de causing further declines in real GDP for Scenarios 1 and 2 and the in
mand when businesses resume operation. Rounds 1–4 of the fiscal crease in health care expenditures raising real GDP sizably. The extent of
stimulus (Rounds 5 and 6 are not implemented until 2021) have a clear, the changes depends on the level of social distancing assumed in
positive impact on most sectors.
12
Scenarios 3a and 3b – with more social distancing in the latter resulting permanent. Nor do we include a measure of the total value of lives lost.
in fewer cases and hence a smaller absolute economic impact.21 Our results should be considered upper-bound estimates for several
reasons. First, we have assumed that reductions in business output are
accompanied by reductions in wages and salaries paid as people become
8.2. Comparison with results of other studies
unemployed, though some businesses continued paying their em
ployees. Second, we have omitted some sources of business resilience,
Few studies have performed a decomposition of the economy-wide
such as the use of inventories, relocation (e.g., haircuts in parking lots),
impacts of COVID-19 according to several causal factors, such as those
and the internet (e.g., education) to continue to help produce goods and
provided in this report. One of the reasons is that many of the estimates
services (Rose, 2017; Dormady et al., 2019). We also do not consider the
utilize macro-econometric or time-series models, which are typically
increase in demand for communications due to the increased use of the
“top-down” approaches and hence less amenable to decomposition in
internet and remote working. Finally, we only include avoidance and
comparison to “bottom-up” models such as ours. However, there are a
pent-up demand in 2020 and 2021. The extent to which avoidance may
few studies that lend themselves to comparison. The first set of studies,
continue is uncertain, but further increases in pent-up demand spending
including one by some of the authors of this paper, has focused on
that are likely to occur in the latter part of 2021 and into 2022 are not
mandatory closures and generally found the impacts on GDP to be in the
considered.
range of 20–25% for closure scenarios similar to those that took place
We also acknowledge the limitations of our model and its applica
(see del Rio-Chanona et al., 2020; Minor et al., 2015; Office of the Texas
tion, as well as of our assessment on how they bear on the results. As is
Governor, 2021; Walmsley et al., 2021a).22 Dixon et al. (2020), using a
the case in most GTAP-based analyses, we assume that, except for factor
quarterly dynamic CGE model, explored the macroeconomic impacts of
markets, all other markets clear and firms are perfectly competitive.
COVID-19 concerning several drivers over a two-year time horizon.
Factors of production are also assumed to be immobile across sectors
They estimated a 19% reduction in GDP at the trough of the economic
within six months, consistent with this paper focusing on the very short-
downturn at the end of the first quarter of 2020 and a 12% decline by the
run impacts of the pandemic. Our results also rely on the estimated
end of the second quarter. They incorporated our estimates of telework
elasticities taken from the literature and used in the GTAP database.
and also included government expenditures on health care and some
Although we calculated the expected changes in government savings
countervailing fiscal policies, such as unemployment compensation and
(deficit) and private household savings separately for our decomposi
tax relief, all of which dampen the negative impacts. CBO (2021b) es
tion, for modeling purposes these changes had to be aggregated into a
timates that real GDP would decline by 11% in the second quarter of
single change in domestic savings, as the model does not separately
2020, resulting in the number of people employed being almost 26
identify government savings (deficit) and private household savings.
million lower than the number in the fourth quarter of 2019. If this rate
were to continue, the decline in U.S. real GDP for the year was projected
to be up to 38% on an annual basis; however, given the reopenings, the 9. Conclusion
overall annual decline was projected to drop to 5.4%.
We refined a dynamic CGE model to estimate the economic conse
quences of COVID-19 over eight semi-annual periods during
8.3. Limitations 2020–2023. A baseline scenario in which the COVID pandemic is
assumed not to occur was first established based on pre-pandemic
This is a short-run study of the impact of the pandemic over the growth forecasts. The COVID pandemic was then incorporated into
period of 2020 to 2023 using data collected or estimated for that period. the model and compared to baseline growth. The various causal factors
While we partially examine the impact of higher and lower efficacy of of the pandemic were added sequentially to decompose their contribu
intervention scenarios on the labor force and health care, we do not tions to the overall impact of COVID on the U.S. economy. These causal
consider the potential ramifications of these or other alternative sce factors include the mandatory closure of businesses and gradual
narios on mandatory closures and avoidance. In addition, we do not take reopenings, the avoidance of workplace and various activities (such as
into account the impact of a long-term decline in labor due to longer- restaurant dining), the impact of deaths and illness on the labor force,
term illness, or “long COVID,” or the potential for behavior changes, the increase in hospitalizations and health care expenses, the fiscal
such as teleworking and avoidance of certain activities, to become more stimulus implemented in 2020 and 2021, and the increase in pent-up
demand once businesses were allowed to reopen. Sensitivity analysis
was performed on disease spread with various interventions relating to
21
We explicitly isolate changes in social distancing. Hence there are no vaccine availability, efficacy, and take-up. The decomposition of the
changes in the other causal factors considered above. For instance, less social influence of various causal factors will help policymakers make adjust
distancing is assumed not to cause less avoidance, and low-efficacy does not
ments to offset the negative influences and reinforce the positive ones
impact business closures or avoidance. This avoids the potential for having to
during the remainder of this pandemic and in anticipation of future
model further interactions between the causal factors and cases/death. As
illustrated above, these other causal factors can have serious implications for
ones.
economic growth (see Walmsley et al., 2021a). This is a stark example of how The analysis of the decomposition revealed that the largest losses
changes in a country’s real GDP (production) do not always coincide with from COVID were associated with the mandatory closure of businesses
welfare movements. and the slow reopening process, followed by the avoidance of workplace
22
Studies of the impact of mandatory closures have been performed for other and other activities by households. While deaths and illnesses resulted in
countries as well. For example, Cottafava et al. (2022) applied the interopera a minimal decline in real GDP, primarily due to the decline in demand
bility input-output model (see, e.g., Santos, 2020) to the impacts in Italy, caused by the declining population, the increase in demand for health
beginning with direct shocks to a few most constrained sectors, as did we. They care led to a rise in real GDP. Pent-up demand is a significant factor in
estimated impacts of approximately €230 billion in 2020, or approximately the recovery process, raising growth ever closer to the original baseline
143% of Italian GDP, which is about 57% as large as the impacts we found for
growth. Early rounds (1–4) of fiscal policy were also very helpful in
the U.S. economy. We offer two reasons for the divergence in the estimates in
alleviating some of the losses in economic growth due to mandatory
addition to the fact that the economic structures of the two countries differ.
First, the Italian study only includes lockdowns for the first 150 days of the year business closures, avoidance, and other causal factors. The benefits of
2020, while our estimates were for a longer period. Second, that study in the last round of fiscal policy are considerably lower, and even negative,
corporates a stylized single parameter measure of resilience, in contrast to the compared to earlier rounds due to crowding out of private investment
detailed analysis of resilience in our study with respect to factors such as and the need for businesses to repay loans.
telework. Several areas of future research present themselves. A prime example
13
would be developing future scenarios involving new variants, more examine the macroeconomic consequences of supply-chain bottlenecks
effective vaccines, and more effective anti-viral treatments. Another caused by the pandemic.
would be conducting surveys to ascertain the long-term impact of
avoidance and changes in the way people work. Survey research can also Data availability
be extended to improve the accuracy of estimates of pent-up demand by
major consumption categories. An additional topic area would be to Some data inputs can be provided, but not all data and models.
Supplementary data
Supplementary data to this article can be found online at https://doi.org/10.1016/j.econmod.2022.106147.
Appendix A. Health Considerations – Appendix to Section 3
A1. Summary of Expert Interviews
We conducted 12 interviews with experts from variable backgrounds including scientists in the field of public health and epidemiology from the
United States, Canada, and the United Kingdom; health officials from state- and federal-level government institutions in the United States; and cli
nicians in the United States. The convenience sample was assembled from experts who work in academic, public, and clinical settings, and who have
published work on COVID-19. Interviews focused on specific issues of interest where literature (at the time of modeling) was limited, including the
effectiveness of social distancing, the likely behavioral response of the public, and the ability of the health care system to handle excessive numbers of
COVID-19 patients during pandemic peaks.
Due to the evolving nature of the COVID-19 pandemic and the limited availability of strong data regarding intervention effectiveness, experts were
consulted both on the parameters used in our model and on possible additions that should be accounted for. Two parameter changes we made on
expert advice are of note.
Multiple interviewees suggested that we account for the effects of seasonality on the effective reproductive number. To account for this variable,
we implemented monthly adjustments to the reproductive number based on Gavenčiak et al. (2021).
It was noted that some interventions, including stay-at-home orders, experienced differing compliance between age groups (CDC, 2020a). While
more granular modeling is possible, the dichotomous distinction between the population under 65 and the population 65 and older has been sufficient
for the outcome of interest in the employed model. Parameters including hospitalization rate, infection fatality rate, and vaccine hesitancy were
age-stratified.
A2. Estimating the Number of Infected International Travelers
COVID-19 was initially introduced to the U.S. through international travel (CDC, 2020c). Our model estimates the number of international
travelers entering the United States on any given day from 6 regions – the Americas, Africa, Europe, Middle East, Western Pacific, and South and
Southeast Asia. Our model utilizes historical estimates for the percentage of travelers from each region and predicts each traveler’s likelihood of
carrying COVID-19 to determine the likely number of COVID-19 cases entering the country.
International travel trends for the 2.5 years included in the model are adjusted based on domestic travel reduction trends in 2019 and 2020 (Bureau
of Transportation Statistics, 2021; International Trade Administration, 2021), referred to as the coefficient reduction due to travel avoidance (we
abstract from international travel restrictions, which affected the numbers of international travelers unevenly). The incoming travelers are then split
into two age groups: travelers under 65 and travelers over 65 based on historical estimates of traveler demographics (it is, however, possible that older
travelers reduced international travel to a higher degree than younger ones).
We draw on I-94 statistics (International Trade Administration, 2021) and develop a model of infection risk as well as an adjustment for lower
travel volumes due to avoidance behavior. We utilize domestic traveler data from 2019 to 2020 from the Bureau of Transportation Statistics to
determine how many fewer international travelers would have come to the United States, had there not been travel restrictions in other countries
(their effects were not modeled explicitly due to their time-varying nature and limited effect given the magnitude of domestic infection counts). Using
these data, we determine a coefficient reduction (as a fraction of 2020 travel relative to 2019). For 2021 and 2022, we estimate a stepwise growth in
international travel based on estimates by the U.S. Travel Association (2021). The calculation of coefficient reductions for each month between
January 2020–June 2022 is shown in Table A1.
Table A1
Estimating International Traveler Volumes due to the COVID-19 Pandemic
Month 2019 International 2019 Domestic Travelers 2020 Domestic Travelers Coefficient Reduction Coefficient Reduction Coefficient Reduction
Travelers (total) (total) (total) (19 vs 20) (21 vs 19) (22 vs 19)
Jan 5,836,439 58,033,637 61,610,519 106.2% 46.5% 55.5%

Feb 5,091,485 55,679,100 59,849,890 107.5% 47.0% 56.0%
Mar 6,258,503 70,234,011 34,410,743 49.0% 47.5% 56.6%
Apr 7,044,707 66,938,177 2,877,134 4.3% 48.0% 57.2%
May 6,703,974 71,365,029 8,238,474 11.5% 48.5% 57.8%
Jun 6,326,970 72,789,897 16,207,341 22.3% 48.9% 58.4%
(continued on next page)
14
Table A1 (continued )
Month 2019 International 2019 Domestic Travelers 2020 Domestic Travelers Coefficient Reduction Coefficient Reduction Coefficient Reduction
Travelers (total) (total) (total) (19 vs 20) (21 vs 19) (22 vs 19)
Jul 7,702,922 75,281,255 22,878,828 30.4% 49.4%

Aug 8,114,715 72,715,907 23,910,297 32.9% 49.9%
Sep 6,703,451 63,979,337 23,854,435 37.3% 50.4%
Oct 6,687,063 69,922,300 28,026,462 40.1% 50.9%
Nov 6,095,118 64,816,897 26,293,043 40.6% 51.4%
Dec 6,876,248 69,718,719 27,263,496 39.1% 51.9%
Total 79,441,595 811,474,266 335,420,662 41.3% 49.2% 56.9%
Next, we divide countries of travel origin based on the WHO (2021) and U.N. World Tourism Organization’s classification: Americas, Africa, East
Asia and Pacific, Europe, Middle East, and South and Southeast Asia. Using data from the (WHO, 2021), the percentage of individuals infected with
COVID-19 within each region per month was estimated, which allowed us to calculate the likelihood of a traveler from that region being infectious
upon entry to the U.S.
As Figure A-1 shows, Europe had the largest risk of infection among travelers to the United States for most of 2020 while Africa had the least. For
periods when data were not yet available (starting in April 2021 at the time of modeling, shaded in the figure), we estimated 10% monthly decrements
of a moving average from the previous 6-month period, resulting in a near-complete elimination of the risk of infection by June 2022 (0.03% for a
traveler from the Americas, 0.02% from South (East) Asia, and 0.01% or less for travelers from the Middle East, Europe, and East Asia/Pacific.
Fig. A 1. Probability of Infection by Region, by Month.
Following this, we combine these estimates to determine the likely number of infected travelers by region entering the United States on any given
day. Initially, the most infected travelers came from Europe, similar to conclusions by Gonzalez-Reiche et al. (2020), who suggest that most index cases
of the March 2020 New York State outbreak originated in Europe. Figure A-2 shows the estimated numbers of daily infectious travelers entering the
United States by region of origin.
Figure A-2. Estimates of Infected International Travelers Entering the U.S.(Daily Average by Month).
15
A3. Vaccination projections
Vaccination projections for the period starting at the beginning of the model (January 1, 2020) and ending on August 12, 2021 were drawn from
CDC vaccination data and based on a delay period after vaccination, vaccine effectiveness, and an assumption on the number of vaccinated individuals
who had already been conferred immunity through previous infection.
Vaccine effectiveness (VE) was assumed as 90% based on a CDC real-world analysis of the Pfizer and Moderna mRNA vaccines (CDC, 2021d); the
effectiveness of the Johnson & Johnson vaccine was not incorporated due to a lack of data on the exact breakdown of administered vaccines by day and
the assumption that the vaccine was not prevalently used (Follow et al., 2021). We accounted for individuals being vaccinated who have already
conferred immunity from a previous infection by weighting the number of vaccinations (v) given by the proportion of the population susceptible to
disease (S) out of all initially susceptible (S0), as shown in the equation below.
S
S → Effectively vaccinated = v*VE*
S0
From August 13, 2021 until the end of the model (July 31, 2022), we halted data scraping from the CDC and stipulated that the number of in
dividuals transitioning from susceptible to vaccinated on a given day was equal to the average of model days August 6, 2021, through August 12, 2021
(a 7-day average) until the population that had undergone vaccination (including those determined to have had an “ineffective” vaccination regimen)
was equal to the population expected to be vaccinated (Kapteyn and Gutsche, 2021).
A4. Reduction in R0 in each scenario
In Figures B-3a/b/c/d, we show the percentage reduction in R0 for each week of 2020 and months of 2021/2022 modeled in the four scenarios.
Fig. A 3a. Scenario 1 - Percent Reductions in R0 for 2020–22.
Fig. A 3b. Scenario 2 - Percent Reductions in R0 for 2020–22.
Percentage reduction estimates in scenario 2 were calibrated to approximate deaths due to influenza in the United States over a comparable period.
We use CDC data (CDC, 2020b) to calculate the mean number of influenza deaths over 2.5 years:
Table A2
Deaths Caused by Influenza from 2015 to 2020
Year Deaths <65 Deaths 65+ Total
2015–2016 5248 17,458 22,706

2016–2017 5396 32,833 38,229
16
Year Deaths <65 Deaths 65+ Total
2017–2018 10,197 50,903 61,100

2018–2019 8603 25,555 34,158
2019–2020 8236 13,673 21,909
Means (per year) 7536 28,084 35,620
Mean estimate over 2.5 years 18,840 70,211 89,051
Fig. A3c. Scenario 3a - Percent Reductions in R0 for 2020–22.
Fig. A 3d. Scenario 3b - Percent Reductions in R0 for 2020–22. .
A5. Viral Seasonality
Liu et al. (2021) showed that the transmission rate of COVID-19 was time-dependent and cyclical, with reductions during the warm season in the
Northern Hemisphere of 46.38 ± 29.10%. We draw on seasonality adjustments estimated by Gavenčiak et al. (2021), calculated for 143 European
regions, and assume the reductions apply similarly in the United States.
A6. Estimates of Hospitalizations and Deaths by Scenario, Period, and Age
Table A3
Age-stratified Estimated Hospitalizations due to COVID-19 in each 6 Months (in millions)
Hospitalizations <65 Hospitalizations 65+
H1/2020 863.8 187.9 5963.7 3746.8 714.0 128.9 7546.6 3671.5
H2/2020 1493.3 64.0 561.6 1528.8 1399.3 51.5 1679.9 3906.4
H1/2021 1352.7 112.5 10.3 45.9 958.6 63.2 8.6 141.7
17
Hospitalizations <65 Hospitalizations 65+
H2/2021 133.9 49.2 7.8 11.0 364.9 19.5 5.7 7.7

H2/2022 99.1 158.3 2.8 6.0 1559.3 29.9 2.2 3.9
Total 3942.8 571.9 6546.1 5338.5 4996.1 293.1 9243.0 7731.2
Note: Sums of semi-annual periods may not equal total due to rounding. These are model estimates.
Table A4
Age-stratified Estimated Deaths from COVID-19 in each 6 Months (In millions)
Deaths <65 Deaths 65+
H1/2020 28.3 6.2 228.4 128.3 109.7 19.8 1397.8 599.4
H2/2020 48.2 2.2 24.1 56.4 209.8 8.2 339.5 692.6
H1/2021 47.0 3.7 0.3 1.6 158.5 9.9 1.4 23.7
H2/2021 4.7 1.7 0.3 0.4 54.4 3.1 0.9 1.2
H1/2022 3.4 5.3 1.0 .204 245.6 4.7 0.4 0.6
Total 131.6 19.1 253.2 186.8 778.0 45.6 1739.9 1317.5
Note: Sums of semi-annual periods may not equal total due to rounding.
We indicate how cumulative deaths differ by scenario and between the age-stratified groups in Figure A-4.
Fig. A4. Graphs of Cumulative Predicted Deaths for the 4 Scenarios.
18
Appendix B. Economic Data – Appendix to Section 4
Appendix Table B-1 presents the estimated direct percentage reduction in U.S. annual GDP by sector due to mandatory closures and the phased-in
reopening process by 6-month period. We defined three categories of sectors based on the DHS Cybersecurity and Infrastructure Security Agency list of
Essential Critical Infrastructure Sectors during COVID-19 (CISA, 2020): Category 1 includes sectors that fall entirely under the non-essential category
and thus were shut down under the mandatory closures (such as Recreation & Entertainment); Category 2 includes sectors within which only some of
their subsectors are non-essential (such as Retail Trade and Business Services); Category 3 includes sectors that are essential and were, therefore, able
to maintain operation to the extent possible.
Table B1
Percentage Reduction of Output by Sector due to Mandatory Closure and Reopening Process (with Telecommuting)
# Sector Mandatory Closure % Reduction in U. % Reduction in U.S. annual

Categorya S. annual GDP by GDP by sector due to phased-in
sector due to reopening after factoring in
mandatory telework
closures after
factoring in
telework
2020_1 2020_2 2020_1 2020_2 2021_1
1–25 Agriculture, Fishing, and Forestry; Mining; Food Processing 3 0.00% 0.00% 0.00% 0.00% 0.00%
26 Beverages and Tobacco products 2 2.90% 0.00% 1.30% 0.00% 0.00%
27 Manufacture of textiles 1 10.60% 0.00% 5.70% 0.01% 0.00%
28 Manufacture of wearing apparel 1 14.10% 0.00% 5.60% 0.02% 0.00%
29 Manufacture of leather and related products 1 14.10% 0.00% 5.60% 0.02% 0.00%
30 Lumber 3 0.00% 0.00% 0.00% 0.00% 0.00%
31–34 Paper and Paper Products; Petroleum and Coke Products; Manufacture of chemicals and 3 0.00% 0.00% 0.00% 0.00% 0.00%
products; Manufacture of pharmaceuticals, medicinal chemical, and botanical products
35 Manufacture of rubber and plastic products 1 11.50% 0.02% 5.50% 0.02% 0.00%
36 Manufacture of other non-metallic mineral products 1 12.00% 0.01% 5.50% 0.02% 0.00%
37 Iron & Steel: basic production and casting 3 0.00% 0.00% 0.00% 0.00% 0.00%
38, 39 Non-Ferrous Metals; Manufacture of fabricated metal products 3 0.00% 0.00% 0.00% 0.00% 0.00%
40 Manufacture of computer, electronic and optical products 1 13.80% 0.01% 5.70% 0.01% 0.00%
41–44 Manufacture of electrical equipment, machinery and equipment, and transport equipment 3 0.00% 0.00% 0.00% 0.00% 0.00%
45–47 Other Manufacturing: includes furniture 1 12.70% 0.01% 5.50% 0.03% 0.00%
46–48 Electricity; Gas manufacture, distribution; Water supply; sewerage, waste management 3 0.00% 0.00% 0.00% 0.00% 0.00%
and remediation activities
49 Construction 2 2.90% 0.00% 1.70% 0.01% 0.00%
50 Wholesale and retail trade; repair of motor vehicles and motorcycles 2 5.40% 0.01% 2.50% 0.01% 0.00%
51 Accommodation, Food and service activities 2 9.30% 0.02% 5.10% 7.44% 4.52%
52 Land transport and transport via pipelines 2 2.20% 0.00% 1.00% 0.15% 0.00%
53 Water transport 2 4.70% 0.00% 2.60% 0.28% 0.00%
54 Air transport 2 8.30% 0.01% 4.50% 0.51% 0.00%
55 Warehousing and support activities 3 0.00% 0.00% 0.00% 0.00% 0.00%
56 Information and communication 2 0.50% 0.00% 0.50% 0.00% 0.00%
57 Other Financial Intermediation: auxiliary activities but not insurance and pensions 2 1.40% 0.00% 1.40% 0.00% 0.00%
58 Insurance 3 0.00% 0.00% 0.00% 0.00% 0.00%
59 Real estate activities 1 7.50% 0.01% 7.70% 0.59% 0.00%
60 Other Business Services not elsewhere classified 2 5.10% 0.01% 5.10% 0.40% 0.00%
61 Recreation & Other Services 1 10.30% 0.01% 14.80% 23.32% 15.00%
62 Other Services (Government) 2 3.60% 0.01% 1.90% 0.13% 0.00%
63 Education 1 4.10% 0.01% 8.10% 10.06% 6.02%
64 Human health and social work 3 0.00% 0.00% 0.00% 0.00% 0.00%
65 Dwellings: imputed rents of owner-occupied dwellings 3 0.00% 0.00% 0.00% 0.00% 0.00%
a
Mandatory Closure Categories: 1. Sector is entirely non-essential and thus is completely shut down; 2. Sector for which only some subsectors are non-essential (see
notes in the last column); 3. Sector that is essential and thus still able to operate in its usual manner to the extent possible.
For the rest of the world, data were collected on the timings of mandatory closures in each country (Wikipedia, 2020), and the U.S. categorization
of essential/non-essential sectors are applied. Where closures were considered partial (e.g., city- or region-wide only), we applied a 50% closure rate.
Each country’s production data were then used to determine the overall share of the sector closed in the rest of the world, assuming the same essential
sector shares as in the U.S. case. The phased-in schedule of U.S. reopenings was also used to determine the timing of reopenings for the rest of the
world, adjusted for differences in the mandatory closure periods between each country and the U.S. Although our focus is on the U.S. economy, it is
important to capture the simultaneous slowdown of China and the rest of the world that occurred over this period, particularly in a global model. For
this reason, we compared the macroeconomic results for China and the rest of the world with actual data to ensure they were consistent. However, we
did not collect the same level of detailed information about China and the rest of the world, as our focus was on the U.S. and it is unlikely that these
additional details would have had a significant impact on our results.
Appendix Table B-2 presents the average per-patient health expenses by health outcome category and by age group. The total estimated COVID-
related health expenditures for each scenario are calculated by multiplying the number of outpatients, hospitalizations, and deaths by the corre
sponding per-patient cost, and are presented in Appendix Table B-3.
19
Table B2
COVID per Patient Health Expenses by Treatment Category and by Age Group
Age Group Hospital Cost Outpatients (with mild symptoms)
Non-ICU ICU
0–19 $15,620 $55,542 $91

20–64 $15,430 $54,866 $57
65þ $16,758 $59,587 $96
Weighted Average $16,131 $56,677 $67
Source: Calculated based on Bartsch et al. (2020) and Fusco et al. (2021).
Table B3
COVID Total Health Expenditures (in millions of 2020 dollars)
Scenario Outpatient Hospitalizations - Non-ICU Hospitalizations - ICU COVID Health Expenses % of Total Annual Output of GTAP Health Sector
Scenario 1 6211 125,952 82,265 214,427 8.35%

Scenario 2 789 11,312 7903 20,004 0.78%
Scenario 3a 10,559 212,972 142,086 365,617 14.23%
Scenario 3b 8662 176,103 115,678 300,443 11.70%
Appendix Tables B-4 and B-5 present the per-patient productivity losses (measured in days) and the total losses in workdays for each health
scenario modeled in Section 3.
Table B4
COVID per Patient Lost Productivity (in days)
Age Group Hospital LOS Productivity Days Loss Outpatient
Non-ICU ICU Non-ICU ICU Productivity Days Loss Additional Days in Isolation
0–19 4.0 9.4 11.5 18.9 1.5 8.5

20–64 6.0 14.1 13.5 23.6 1.9 8.1
65þ 7.0 16.6 14.5 26.1 5.3 4.7
Sources: Calculations based on Prager et al. (2017), Chen et al. (2020), Zhao et al. (2020), Fusco et al. (2021), and Walmsley et al. (2021).
Table B5
Lost Productivity Due to Own COVID Illness and Caring for Sick Family Members from COVID (in thousands of days)
Scenario Outpatient Medical Treatment Hospitalizations Non-ICU Hospitalizations ICU Fatalities Total Percentage Change in Labor Force
Scenario 1 392,153 78,665 25,350 113,700 609,868 − 0.59%

Scenario 2 48,507 7384 2514 8083 66,488 − 0.07%
Scenario 3a 669,611 138,956 45,412 249,136 1,103,115 − 1.03%
Scenario 3b 549,885 115,291 37,348 188,049 890,572 − 0.83%
Appendix Table B-6 presents the percentage increase of consumption from the “Lowest Point” level for major categories of goods and services at
five points in time with three-month intervals after the beginning of the reopening. The linkages to the CGE model sectors and the share of the sectoral
output affected are also presented in the table.
Table B6
Percentage Consumption Changes Compared to the “Lowest Level” after COVID by Commodity/Service Type and Mapping to CGE Sectors
Good/Service 2020.6 2020.9 2020.12 2021.3 2021.6 GTAP Sector Share of GTAP
Sector
Automobiles 79% 65% 20% 200% 200% 50 Wholesale and retail trade; repair of motor 5.5%
vehicles
Real Estate 50% 60% 55% 50% 59 Real estate activities 100%
Air Travel 32% 37% 25% 72% 56% 54 Air transport 94.1%
Restaurant Dining 56% 55% 43% 119% 120% 51 Accommodation, Food and service activities 71.7%
Live Experiences (sporting events, 39% 35% 30% 65% 85% 61 Recreation & Other Services 16.5%
concerts, etc.)
Apparel 72% 56% 66% 143% 148% 50 Wholesale and Retail Trade; Repair of Motor 4.1%
Vehicles
General Merchandise 67% 22% 19% 158% 142% 50 Wholesale and Retail Trade; Repair of Motor 6.8%
Vehicles
Hotels and other Hospitality 45% 49% 54% 79% 81% 51 Accommodation, Food and Service Activities 16.8%
Wellness and Fitness 54% 38% 12% 106% 96% 61 Recreation and Other Services 3.0%
20
Appendix C. Physical Stimulus Bills – Appendix to Section 4
C1. Summary of COVID-19 Stimulus Bills
Table C-1 summarizes the main provisions of each of the six stimulus bills the U.S. Congress enacted.
Table C1
Summary of COVID-19 Stimulus Bills Enacted by the U.S. Federal Government
Stimulus Bill Date Enacted Main Provisions Estimated Spending

(billions, USD)a
Coronavirus Preparedness and Response Supplemental March 6, Funding for federal, state, and local health agencies, and the purchase of 8
Appropriations Act, 2020 2020 vaccines and treatments
Families First Coronavirus Response Act March 18, Tax credits for paid medical leave, increased funding for nutritional 192
2020 assistance, and unemployment benefits
Coronavirus Aid, Relief, and Economic Security (CARES) March 27, Cash payments for individuals, extra unemployment benefits, forgivable 1902
Act 2020 loans for small businesses, loans for medium and large businesses, and
corporate tax relief
Paycheck Protection Program and Health Care April 24, Extension of forgivable loan program for small businesses, 342
Enhancement Act 2020 reimbursements for health care providers, and funding for testing
Coronavirus Response and Relief Supplemental December 27, Cash payments for individuals, extra unemployment benefits, and 864
Appropriations Act, 2021 and Additional Coronavirus 2020 extension of the forgivable loan program for small businesses
Response and Relief Act
American Rescue Plan Act of 2021 March 11, Cash payments for individuals, extra unemployment benefits, support for 1825
2021 state and local governments
a
Estimated spending is based on preliminary projections by the Congressional Budget Office (CBO, 2021a) and includes increases in direct spending as well as
declines in tax and fee revenue.
The first bill was signed into law in early March 2020 and focused on enhancing the government’s preparedness and public health response by
providing funds to the Department of Health and Human Services (HHS) and state and local health agencies. Less than two weeks later, the U.S.
Congress passed the Families First Coronavirus Response Act (CBO, 2020a). Like the first bill, this Act aimed to improve the public health response to
the crisis, but it also sought to address the economic impact of the pandemic by enhancing safety net provisions. A paid sick leave provision, which
required certain employers to pay the full or partial salary of employees unable to work due to COVID-19, was estimated to cost $105 billion (more
than half the total cost of the bill) in tax credits.
As COVID-19 cases rose in mid-March, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in late March,
which amounted to more than $1.9 trillion in spending and tax credits (CBO, 2020b). The bill included $100 billion for hospitals and $50 billion for
other public health provisions. Airline companies received $w50 billion for not laying off employees. The legislation also provided $340 billion for
state and local governments, mostly directed to COVID-19 response efforts. Three other provisions amounted to approximately half of the bill’s total
cost: payments for individuals and dependents, enhanced unemployment insurance, and the Paycheck Protection Program (PPP), a forgivable loan
scheme for small businesses. The cash payments provided up to $1200 per person making less than $99,000 a year, with an additional $500 per child.
Unemployed individuals received supplemental weekly payments of $600 for 13 weeks. The PPP loans are fully forgivable if businesses use the funds
to cover payroll or other eligible expenses and meet certain conditions such as not laying off workers – we assume that they will not be paid back in our
simulations.
After the $350 billion allocated by the CARES Act to PPP ran out, Congress funded an extension in April 2020 (Duehren and Omeokwe, 2021). The
Paycheck Protection Program and Health Care Enhancement Act appropriated another $310 billion for PPP loans. It also included another $75 billion
for hospitals and $25 billion for testing. In our model, we group these initial four bills because they went into effect during a relatively short period,
from March to April 2020.
Eight months later, after a second wave of COVID-19 infections in the Fall of 2020, the U.S. Congress approved another comprehensive stimulus bill
of nearly $900 billion as part of the Appropriations Act of 2021 (Wall Street Journal, 2020). Many of its provisions were scaled-back extensions of
CARES Act provisions: cash payments of up to $600 for individuals earning up to $87,000 a year and additional $600 per dependent; weekly un
employment supplement payments of $300 for 11 weeks; and a third extension of the PPP program.
In March 2021, following a surge of COVID-19 cases and deaths, Congress approved another major stimulus bill. Some of the major provisions
extended support provided to households and unemployed individuals under the December 2020 package. These provisions included additional one-
time cash payments of up to $1400 per adult and child for eligible households and an extension of boosted unemployment payments through
September, additional funding for vaccines and testing, schools and universities, $350 billion to state and local governments, and an increase to the
child tax credit (CBO, 2021b).
C2. Stimulus Implementation and Impact
Several issues with the implementation of the CARES Act delayed relief. These issues include confusion among borrowers and lenders about the
PPP program and its eligibility criteria, and difficulties in delivering cash payments to nine million, hard-to-reach individuals (GAO, 2020). State
governments were also overwhelmed and slow to process enhanced unemployment payments (Iacurci, 2021). Finally, the emergency programs
administered by the Federal Reserve only provided $41.1 billion in assistance, a fraction of the announced size of those programs of $4 trillion (CRS,
2021). In the analysis below, we do not model the Federal Reserve loans directly because we assume they will be repaid and because the low uptake
suggests the lending terms did not represent a subsidy relative to commercial credit.
Some economists have criticized the cash payments to individuals as not sufficiently targeted to those most in need, arguing that further increasing
unemployment benefits or extending their duration would be a more efficient use of resources (Schwartz and Friedman, 2020). Coibion et al. (2020)
find that those who received cash payments under the CARES Act on average planned to spend only 40% of their stimulus checks. Baker et al. (2020)
similarly estimate that during the first weeks, payment recipients spent 25–40% of the stimulus, but that share was higher for households with lower or
21
declining incomes, highlighting the importance of targeting. In our model, we assumed 7.8% of unemployment benefits and 36% of cash payments and
other household payments were saved based on household surveys (Armantier et al., 2020; Coibion et al., 2020; Leer, 2021).
Another criticism of the stimulus provisions is that they had a limited capacity to restore economic activity for the most impacted sectors such as
hospitality and entertainment, where consumer spending was constrained by mandatory shutdowns and avoidance (Chetty et al., 2020). We assumed
that the stimulus provisions could not raise production in sectors constrained by mandatory closures.
Furthermore, the PPP loans appear to have had a limited effect on preserving and creating jobs, the program’s main goal. The short- and medium-
term employment effects of the Program were small, with many firms using the loans to make non-payroll payments and build up savings (Granja
et al., 2020). Chetty et al. (2020) estimate that the initial round of PPP loans increased employment at small businesses by only 2%, at $377,000 per
job saved. For sectors constrained by mandatory closures, we assumed that a portion of the loans—equivalent to the portion of the sector subject to
mandatory closures—went directly to the owners or employees as income, allowing us to capture some of this effect.
The aforementioned studies suggest that stimulus provisions are not equally cost-effective, and that policy design is critical to meeting the specific
objectives of policymakers. Targeting and timing are important considerations. Provisions that provide aid to the most affected individuals (e.g.,
enhanced unemployment benefits), and sectors (e.g., forgivable loans to airlines) may be more effective than other measures.
C3. Data Refinement
For most stimulus provisions, we assume the federal government spends the stimulus funds over time rather than at once. The CBO provides
estimates of the direct cost of each provision, measured as an increase in spending or decline in revenue, yearly for the next 10 years. In the dynamic
CGE model, the effects of the stimulus are estimated every six months. Annual CBO cost estimates are converted to semiannual figures for each
provision by assuming an even distribution over a given year after accounting for the date that the related stimulus bill was passed. Some of the CBO
cost estimates are implemented after 2023 and hence do not enter our simulations, but 98% of the fiscal stimulus spending is estimated to take place
before then. Table C-2 shows how the funds were implemented into the model over time.
Funding for the PPP was assigned to various GTAP sectors based on loan disbursement breakdowns published by the Small Business Administration
(SBA, 2020a). The initial $342 billion provided by the CARES Act for PPP was apportioned to corresponding GTAP sectors based on loan approvals
through April 16, 2020, when the initial PPP funds had run out, but before the U.S. Congress had approved additional funds.23
The following assumptions are adopted when simulating the impacts of loans to businesses. The method used in the CGE simulations depends on
the assumption of whether the sector/firm receiving the forgivable loans is open or closed for business. The distribution of loans is assumed to take
place through the following two mechanisms:
• Option 1: As a direct payment to households when the intention is to give money directly to the workers or owners to survive a period when their
business or place of work is closed. This is simulated as increased payments to households in the CGE modeling.
• Option 2: As a subsidy to businesses when the intention is to help the business stay open and keep producing, despite issues with sick workers and
transition to telework. This is simulated as subsidies split between capital and labor using value-added shares for each sector in the CGE modeling
or where information on who the loans were intended for is available (e.g., workers or owners), this information was used to allocate the subsidy.24
Table C-2 depicts how the amounts for each provision over time for each of the 6 rounds were incorporated into the model as three rounds (1–4, 5,
and 6) and for five major categories (Unemployment assistance; Assistance to households (direct payments and assistance); Government spending
(Federal, State, and Local); Assistance to businesses (e.g., loans) and Corporate tax relief). Not all rounds included all categories and increases in
foreign aid and unallocated funds were not modeled.
Table C2
Total Spending Amount by Round and Aggregate Category Modeled over Time
Round Details 2020 2021 2022 2023 Post-2023 (or not captured) Total
1–4 Unemployment Assistance 222.0 49.9 0.0 0.0 0.0 272.0

1–4 Direct Payments to Individuals 270.0 23.0 0.0 0.0 0.0 293.0
1–4 Assistance to individuals 216.1 110.1 − 3.5 − 2.2 − 6.5 314.0
1–4 Government spending (Federal, State and Local) 348.4 234.7 82.9 23.1 9.0 698.2
1–4 Assistance to Businesses (e.g., Loans) 630.6 10.0 1.9 1.4 0.0 643.9
1–4 Corporate tax Relief 348.5 258.5 − 174.0 − 173.0 − 56.0 204.0
1–4 Foreign aid 1.2 1.2
5 Unemployment Assistance 0.0 117.0 0.3 0.7 1.2 119.2
5 Direct Payments to Individuals 0.0 169.2 0.1 − 0.1 − 0.3 168.9
5 Assistance to individuals 0.0 36.8 0.3 0.1 0.2 37.4
5 Government spending (Federal, State and Local) 0.0 96.8 66.1 30.5 23.4 216.7
5 Assistance to Businesses (e.g., Loans) 0.0 315.7 6.8 0.2 − 0.5 322.1
6 Unemployment Assistance 0.0 221.3 10.4 0.0 − 0.1 231.6
6 Direct Payments to Individuals 0.0 393.7 16.9 0.0 0.0 410.6
6 Assistance to individuals 0.0 68.3 126.9 11.1 − 3.8 202.5
23
The allocation of PPP funds made available by the Paycheck Protection Program and Health Care Enhancement Act, which extended funding for the program, was
based on the breakdown of approvals from April 16 to August 8, 2020, the last such report published by the SBA (2020b) that year. The distribution of the PPP loans
from the third round of funding, provided in late December 2020, is based on the cumulative loan approvals for 2021 after subtracting funds earmarked for live
entertainment venues ($15 billion). In the model, we assume all PPP loans are fully forgiven as Congress has greatly simplified the application process and relaxed the
criteria for forgiveness.
24
There can also be cases in which the loans help the sectors in both ways as illustrated in the above two options. In such cases, we split the loan amounts between
Option 1 and Option 2 depending on the extent to which the sector was subject to mandatory closures.
22
Table C2 (continued )
Round Details 2020 2021 2022 2023 Post-2023 (or not captured) Total
6 Government spending (Federal, State and Local) 0.0 398.5 266.2 94.9 107.0 866.7
6 Assistance to Businesses (e.g., Loans) 0.0 72.8 3.3 0.6 − 2.6 74.1
6 Corporate tax Relief 0.0 2.7 5.7 − 3.1 − 26.3 − 21.0
6 Foreign aid 10.3 10.3
6 Unallocated 50.3 50.3
Totals 2035.7 2579.1 410.3 ¡16.0 106.5 5115.6
Note: The negative numbers for some of the provisions in later years represent the impacts of tax deferral or removal of some tax exemptions.
Appendix D. Modeling the Impact of Causal Factors – Appendix to Section 5
In this appendix we provide further details about the model, closures and shocks used in the simulations.
D1. Model and Time
The dynamic model is run on a semi-annual basis. This is achieved using the variable time, provided in the GDyn model (Ianchovichina and
Walmsley, 2012) combined with the approach developed in Dixon et al. (2010):
1. Shocking the value of the variable time by 0.5 each period to represent half a year, rather than by 1 for a whole year. The GDyn model is set up so
that all of the equations that depend on the length of the period are multiplied by the variable time. By shocking time by a half, only half of a
region’s investment adds to the capital stocks during the period, and the percent change in capital stocks is half of what it would have done if time
had been shocked by 1.
2. While the cumulation equations were fixed by the inclusion of the time variable, some of the other convergence parameters needed to be reduced to
ensure slower convergence of rates or return and return to full employment.
3. Similarly, some of the shocks, primarily those related to avoidance,25 also need to be divided by two in order to obtain annualized 6-monthly
shocks. The results from the model were then converted back to semi-annual percent changes by multiplying the result by two.
D2. Baseline
Shocks are given to the following variables:
- Time (0.5 since the period length is ½)

- Population forecasts from the UN (pop)
- Forecasts of factor supply by education (qedusup) based on CEPII forecasts (see Minor et al. (2015) for how the model incorporates labor by
education and occupation)
- Forecasts of GDP (qgdp), investment (qcgds) and government spending (yg) from World Economic Outlook.
Since some of these variables are endogenous in the standard closure of the model, we make the following closure changes provided in Table D-1:
Table D1
Closures used in Baseline
Variable in model (originally Description Variable in model used for swap Description
endogenous, becomes (originally exogenous, becomes
exogenous) endogenous)
GDP
qgdp(REG) Real GDP afereg(REG) (GDyn variable) Productivity on factors of production
Investment
sqcgdsreg(“all regions but last Shift variables in GDyn for fixing investment. When SDRORT(“all regions but last one”) Risk premium in GDyn (similar to
one”) (GDyn variable) sqcgdsreg(r) fixed, investment is fixed. Sqcgdsworld is fixed (GDyn variable) cgdslack in GTAP)
qcgds(r) = sqcgdsreg(r) + in the standard closure.
sqcgdsworld
sqcgdsreg(“last region”) (GDyn Shift variable related to investment for the last region25 dpsavewld (not in GTAP) Global savings adjustment that alters
variable) dpave. dpsave(r) = dpsaveshift(r) +
dpsavewld
Government spending
yg(REG) Government spending dpgov(REG) Distribution parameter on government
spending
D3. Policy simulations
The policy simulations were added consecutively to the baseline. In the initial mandatory business closures simulation, the difference between the
mandatory closure simulation and the baseline are attributed to mandatory closures. Avoidance, deaths and illness, health care, fiscal policy and pent-
up demand are then added consecutively to the previous simulation and the differences between policy simulations is attributed to the addition of that
25
The other shocks to mandatory business closures, labor etc were annualized as part of the initial calculations.
23
policy. In this section, we first examine some of the preliminary closure swaps (Table D-2), before turning to the closures and shocks used to implement
each of the causal factors (Table D-3).26
Preliminaries
Table D 2 provides a list of closure swaps incorporated to set the stage for the analysis of COVID.
First, we assume that consumption of essentials remains constant, thereby ensuring that the decline in demand resulting from lower household
income falls more heavily on non-essential items, as we might expect with unemployment and the mandatory closure of non-essential businesses.
As in the baseline, we also continue to fix government spending, but rather than allowing both private consumption and savings to adjust as is
typical in GTAP because of the regional household, we include an additional swap that ensures that any excess government spending over tax revenues
impacts only savings (i.e., the government deficit), and not private consumption. Later in the fiscal stimulus simulations, government spending will be
raised, but for the initial simulations, government spending is assumed to be fixed. We also assume that demand for health care services remains
unchanged in the initial simulations. This allows us to more easily implement the changes expected in health care due to avoidance, illness and
government spending in our subsequent simulations. This also ensures that any changes made to the share of private consumption implemented
through the distribution parameter (dppriv) will impact the savings rate.
Finally, we make a small change to the Dynamic GTAP (GDyn) model theory in order to stop the “normal” growth rate from moving with the actual
growth rate during COVID. This reflects our belief that COVID is an unusual and temporary event, and while COVID significantly reduces actual
economic growth in the short run, its impact on a country’s normal, long run, growth rate is uncertain – particularly over the short time horizon we
consider here. We therefore chose to fix the normal growth rate in the model. This was done to reduce some of the instability in investment and trade
balances caused by excess savings from the mandatory closure of businesses and avoidance, which were eventually used to pay for government
spending and pent-up demand.
Table D2
Closures used for COVID simulations
Variable in model Description Variable in model used for Description

(originally endogenous) swap (originally exogenous)
Consumption of Essential goods was fixed

qp_agg(“essentials”,REG) Aggregated private household consumption of dpp_agg(“essentials”,REG) (not Distribution parameter applied to private consumption of
(not in GTAP) all essential and all non-essential commoditiesa in GTAP) essentials. Implemented using methods discussed in Walmsley and
Minor (2020b)
Fixed Government spending
yg(REG) Government expenditure dpgov(REG) Distribution parameter on government spending
dpav(REG) Average distribution parameter on Cobb dpsave_shift1(REG) (essentially Savings distribution parameterc
Douglas function of regional householdb dpsave in the GTAP model)
Demand for Health fixed
qp(“hht",REG) and qg Consumption of health care by private and dpp_stop(“hht",REG) and Phantom taxes on demand for health care
(“hht”,REG) government assumed fixed dpg_stop(“hht”,REG)
Turned off a long run adjustment in the dynamic modeld
DKHAT(REG) (GDyn Change in normal growth rate from GDyn SDKHAT(REG) (GDyn model Shifter to turn off equation determining the change in normal
model variable) model variable) growth rate
a
Each commodity is categorized as either essential or non-essential (mapping MAPTC2TCA), then this is used to create an aggregate consumption bundle of essential
goods that can be held exogenous. In GTAP notation: qp_agg(a,s) = sum(i, TRAD_COMM: MAPTC2TCA(i) = a, SHRVPA(i,s) * qp(i,s)), where SHRVPA(i,s) = VPA(i,s)/
sum(k, TRAD_COMM: MAPTC2TCA(k) = i, VPA(k,s)).
b
If a distribution parameter for consumption, government spending or savings is altered, this causes the other expenditures to adjust and ensures that expenditure
equals income. Since a Cobb-Douglas function is used changes in the distribution parameters also represent changes in shares and the shares must always sum to 1.
c
Adjustment required to ensure that savings adjust in response to fixed government spending – i.e., the government deficit rose or fell. The GTAP model uses a
regional household and fixing government spending using only the first closure swap, causes both savings (government deficit) and private consumption to adjust to
ensure equilibrium. Ordinarily this does not cause any significant issues, but in the case of COVID, where changes in income are significant, the adjustments in savings
and private consumption can be large.
d
The Dynamic GTAP (GDyn) model theory allows for a ‘normal’ growth rate in an economy that gradually converges on the typical, average growth rate of the
economy. This gradual convergence occurs as the normal growth rate partially adapts to changes in the actual rate of return, believing that over time changes these
changes in the actual return will be incorporated into the long run average. In these simulations we did not allow the normal growth rate to respond to the reduction in
actual growth caused by COVID. The assumption is that COVID is an unusual and temporary event that significantly reduces economic growth in the short run, but is
unlikely to impact a country’s normal, long run rate, particularly during the short period we considered. This reduces the variability in the movement of investment
between countries in response to differences in the timing of mandatory closures across countries due to the cyclical nature of COVID variants.
Causal Factors
To model the impact of COVID, we sequentially add each of the following contributing factors.
Mandatory closures
To capture the impact of the mandatory business closures, we reduce the production of the affected sectors using the expedient device of a
26
We are unable to fix investment for all regions because there is a balancing constraint that global savings must equal global investment. In order to capture
investment in the last region, we allow the global savings to adjust to ensure that forecast investment (for all regions) equals global savings.
24
“phantom tax” to raise prices and lower production through a reduction in final demand. To do this we use a closure swap to exogenise sectoral
production and endogenize the corresponding output tax (first section of Table D-3),. The rents, captured by the phantom output tax, accrue to the
GTAP regional household.27
Table D3
Closures and shocks by causal factor
Causal Factors CGE Model Shocks Closure swap (if required) Approach
Mandatory Closures Production (qo(“selected sectors”,REG)) Production tax (to(“selected “Phantom tax” approach used to raise prices and
sectors”,REG)) lower production through a reduction in demand
Reduction in share of private consumption and rise in savings n.a.
rate (dppriv(REG))
Decline in the workforce due Supply of labor (qedusup(REG)) n.a.
to deaths and illness
pop(REG) n.a.
qp_agg(“essentials”,REG) dpp_agg(“essentials”,REG) This closure swap appears in all simulations to fix
consumption of essentials
Avoidance Reductions in the effective supply of labor (qedusup(REG)) n.a.
Reductions in private demand (qp(“selected sectors”,REG)) dpp_stop(“selected sectors”, Distribution parameters approach
REG)
Reductions in government demand for health (qg(” hht”,REG)) dpg_stop(“hht”,REG) Distribution parameters approach
Reduction in share of private consumption and rise in savings n.a.
(dppriv(REG))
Increased demand for health Increased private demand for health care (qp(“hht”,REG)) dpp_stop(“hht”,REG) Distribution parameters approach
care
Increased government demand for health care (qg(“hht “, dpg_stop(“hht”,REG) Distribution parameters approach
REG))
Rise in share of private consumption and rise in savings n.a.
(dppriv(REG))
Rise in government spending (yg(REG)) dpgov(REG) This closure swap appears in all simulations to stop
government spending from falling with income.
Pent-up demand Increased demand for specific commodities and services (qp dpp_stop(“selected sectors”, Distribution parameters approach
(“selected sectors”,REG)) REG)
Rise in share of private consumption and rise in savings n.a.
(dppriv(REG))
Fiscal policy Unemployment and other direct payments to households n.a.
(dppriv(REG))
Rise in total government spending (yg(REG)) dpgov(REG) This closure swap appears in all simulations to stop
government spending from falling with income.
Rise in government spending for the public sector (vg(“ogs”, dpg_stop(“ogs”, REG) Distribution parameters approach
REG))a
Rise in government spending of other specific commodities dpg_stop(“selected Distribution parameters approach
(education and health) (vg(“selected commodities”, REG)) commodities”, REG)
Rise in public sector spending of specific commodities (vf dpf_stop(“selected Distribution parameters approach
(“selected commodities”, “osg”,REG))b commodities”, “osg”,REG)
Rise in health spending on pharmaceuticals (vf(“bph”, “hht”, dpf_stop(“bph”, “hht”,REG) Distribution parameters approach
REG))
Rise in spending on commodities for investment purposes (vf dpf_stop(“selected Distribution parameters approach
(“selected commodities”, “cgds”,REG))c commodities”, “cgds”,REG))
Subsidies to firms for workers and owners tfe(ENDW,“selected n.a.
sectors”,REG)
Corporate taxes tfe(“Capital”,“selected sectors”,REG)d n.a.
a
Variables labeled with a preceding “v” represent the sum of changes in the quantity and price relative to the numeraire. For instance, vg(i,r) is the percent change in
the value of government purchases relative to the model numeraire: vg(i,r) = qg(i,r) + pg(i,r) - ptradewld. Note adding ptradewld to this equation does nothing, it is
added for those who might be concerned about homogeneity when shocking so called ‘values’.
b
GTAP sectors cns, ele, ofi, otp and cmn.
c
GTAP sectors cmn and ele.
d
While tfe is not the most appropriate tax to use for corporate taxes, there is no explicit corporate tax rate in the GTAP model and the other alternative, to (production
tax), was being used for mandatory closures, making tfe the simpler option.
Production is then shocked by the share of the period where no production takes place (Table B-1), after taking into account the ability to telework
within an industry. For instance, if we take information from Table B-1 we see that the beverages and tobacco industry closed down for the equivalent
of 2.9 percent of the year in the first six months. The gradual reopening of businesses meant that businesses were closed for a further 1.3 percent, or a
total of a 4.2 percent (annualized) reduction in production in 2020_1. As sectors reopen or are closed for shorter periods in the second and later semi-
annual periods, these phantom taxes are removed gradually according to the rate of reopening. In the second period, the beverage sector was closed for
less than 0.01 percent (annualized) in total for the period, hence relative to the previous period, production of beverages rose, which we implement
through a fall in the ‘phantom tax’. In the first period of 2021, the sector was fully opened and the endogenously determined rent/phantom tax is
removed completely. In two cases (recreational services and accommodation and food services) mandatory business closures extend into the until the
first half of 2021, the rent/phantom tax only being fully removed in the second half of 2021.
27
We do not include a tax replacement closure, because the regional household collects all the income from factors and taxes (rents), which it then allocates across
private consumption, government spending and savings. Hence the rents from the phantom tax already go to private households, particularly as government
spending is fixed, and hence there is no need to reallocate the rents from the increase in the tax rate to private households by reducing other taxes through a tax
replacement closure change.
25
This must be done in several iterations to take account of the indirect effects of closing some sectors on other sectors. For instance, if restaurants are
forced to close, demand for fruit and vegetables or beverages and tobacco used in producing restaurant meals also declines. In some cases (beverages
and tobacco for instance), these indirect effects from the mandatory closures (of restaurants, for instance) are larger than the share of that sector
subject to the mandatory closure, and, hence, we allow these indirect effects to dominate and sectoral production to decline by more than the share of
the sector subject to the mandatory closure. This can be seen by looking at the sign of the endogenously determined rent/phantom tax (to). If the
endogenously determined rent/phantom tax falls (i.e., to is positive), then this was an indication that the model predicted a larger decline in pro
duction than the period during which businesses in that sector was closed. These sectors (and countries/regions) would then be removed from the list
of shocked sectors and the simulation re-run and rechecked. It can take several iterations to obtain the list of sectors that need to be shocked to ensure
all the sectors decline by at least the time of the mandatory closures. In the case or re-openings, we also need to ensure that the sector does not expand
beyond the share of the sector forced to close during that period. We take account of any potential expansion in production over this share; however, it
is captured under pent-up demand, rather than under mandatory closures. Below, in Table D-4, is a list of sectors by region that were shocked in period
1.28
Table D4
Shocks to capture the Mandatory Closure of Businesses in the
first period (2020_1)
Variable shocked Shocks (based on Table B-1)
qo(“rpp","USA") − 16.96
qo(“nmm","USA") − 17.55
qo(“nmm","China") − 1.86
qo(“ele","USA") − 19.52
qo(“omf","USA") − 18.26
qo(“ros","USA") − 25.10
qo(“osg","China") − 0.67
qo(“osg","ROW") − 1.70
qo(“edu","China") − 12.13
In addition to the business closures, we assume that any income from foregone consumption due to the mandatory closures was saved; savings rates
therefore rise via a shock to the share if private consumption (dppriv).
Decline in the workforce due to deaths and illness

The decline in the workforce due to deaths and illness is implemented as a decline in the supply of labor and population, as well as a decline in
demand for essential goods and services (Table D-3). Since the workforce and population are already exogenous, no closure changes were required for
this simulation. Changes in the labor force reflect the number of deaths, as well as illnesses (including workday losses due to caring for sick family
members), of the working age population as a share of the labor force (164,600,000) and the number of working days (250 per working person) in a
year; while the change in population reflects all fatalities, outlined in Appendix B, as a portion of the total population. The shocks are provided in
Table D-5 below.
Table D5
Shocks to US labor force and population due to illness and death due to COVID in Scenario 1
(percent)
Labor force (qedusup, not in GTAP) Population (pop)
2020_1 − 0.12 − 0.04

2020_2 − 0.21 − 0.08
2021_1 − 0.17 − 0.06
2021_2 − 0.02 − 0.02
2022_1 − 0.05 − 0.08
We assume all labor types, regardless of education level, are impacted by the same proportion. Thus, we assume that the pandemic does not
discriminate, even though evidence may suggest that lower-skilled workers in customer-facing occupations may have been affected more than other
workers. Given the impact of these deaths and illnesses on the workforce and the overall economy is very small relative to the other causal factors, this
assumption is unlikely to impact our results significantly.
In addition, private demand for essential goods was also reduced to reflect the decline in demand due to the decline in the population.
Avoidance
Avoidance behavior impacted both the supply of labor and the demand for certain goods and services. These were implemented directly as changes
in labor supply and changes in private consumers’ preferences for goods and services, and, in the case of health care, government preferences (Table D-
3). In the case of the changes to private and government demand, closures swaps are required. In this case we chose to endogenize the relevant
distribution parameters (preferences) to reduce demand exogenously rather than use the phantom tax approach. We also assume that total gov
ernment spending is fixexfd and shocked by the total increase in spending, and that any income from foregone consumption due to avoidance was
saved. As avoidance dissipated, preferences and savings return to normal.
The shocks are taken from Table 3 and are then applied to the following variables:
28
Although some declines in trade were also estimated, restrictions on trade were not required for any sector, region, region combination to achieve the estimated
declines, once production was restricted. We therefore implemented no changes in trade.
26
- Effective supply of labor by education (qedusup, not in the GTAP model) is shocked by − 3.6443 (or (4.58 + 2.71)/2)29 in the first period.
- Private demand (qp) for education (− 1.59/2), health care (− 29.16/2), trade (− 5.85/2), recreational services (− 21.17/2), accommodation and
food services (-(26.5 + 9.67)/2), air (− 57.48/2) and other (− 4.21/2) transport are applied to the relevant sector. Income not spent on private
consumption because of avoidance is allocated to savings rather than to other goods and services, hence we also shock the share of private
expenditure in income (dppriv) to reflect the decline in private consumption, which increases the savings rate.
- Government demand (qg) for health care (− 29.16/2). Again, government revenue not spent on health care services is assumed to increase savings
(or reduce the government deficit), hence we also shock government spending (yg) by the decline in government spending, causing savings to rise.
Avoidance is then assumed to reverse in the second half of 2021 which is simulated as the removal of the effective labor supply and the distribution
parameters.
Increased demand for health care

Increased demand for health care due to COVID was also implemented as an increase in demand (preferences) for health care by private and
government consumers (Table D-3). Both variables are then shocked by the same percentage changes (1.45 percent in 2020_1, 2.67 percent in 2020_2,
2.07 percent in 2021_1, 0.45 in 2021_2 and 1.45 in 2022_1).30 It was assumed that any health care expenses were paid for out of savings, resulting in a
reduction in the savings rate. We therefore also shock the share of private expenditure (through dppriv) and total government spending by the increase
in total spending to ensure that savings fall. Again, these preferences are reversed as the demand for health care returns to normal.
Pent-up demand
Pent-up demand was simulated as an increase in demand for goods and services that final consumers had been unable to purchase due to
mandatory closures or avoidance. Pent-up demand was found by comparing actual changes in demand by final consumers to model estimates. Where
demand was found to be stronger than the model predicted, an increase in demand was simulated. Table B-6 provides estimates of demand for selected
goods relative to the fall in demand at the height of COVID (April 2020). Where the model predicts a lower demand for these commodities than the
actual, we assume that the difference is due to pent-up demand. Based on the model results we obtain the following shocks for the U.S. (Table D-6). As
in previous simulations we need to shock demand by private consumers for specific commodities and we again use the relevant distribution pa
rameters to exogenise demand (Table D-3).
Any increased private consumption was assumed to be funded from savings using shocks to the share of private consumption (dppriv). Again, the
rise in preferences and savings are reversed as pent-up demand subsides. Since we were only able to obtain estimates of pent-up demand for 2020 and
the first half of 2021, further pent-up demand in late 2021 and 2022 could lead to further increases in real GDP.
Table D6
Shocks to capture pent-up demand (based on Table B-6 and model results) (percent)
Variable shocked 2020_1 2020_2 2021_1
qp(“trd","USA") 6.39 – 1.60

qp(“afs","USA") 41.60 19.83 –
qp(“atp","USA") 3.47 – 24.31
qp(“rsa","USA") 14.42 – 31.60
qp(“ros","USA") 6.97 – 3.75
qp(“hht","USA") 14.65 – 0.75
Fiscal policy
The various rounds of fiscal stimulus were decomposed according to both round and mechanism for the U.S. Unlike the other causal effects, where
we also created estimates for China and the rest of the world, we did not implement any fiscal policy changes in China and the rest of world. The
impacts of the fiscal stimulus were separated into three parts: 1) Rounds 1–4, implemented in early 2020, 2) Round 5, implemented in late 2020 and
early 2021, and 3) Round 6, implemented in early 2021. When we prepare the input data for the CGE modeling, detailed provisions in each of these
rounds were categorized by the type of fiscal stimulus implemented. Not all rounds used all these categories. The closures and shocks required to
implement the fiscal stimulus depended on the type of assistance and are summarized in Table D-3 and include:
- Unemployment and other direct payments and assistance to individuals are implemented as shocks to private household consumption via the
distribution parameter (dppriv). The shocks are given in Table D-7. Since these payments are temporary, the shocks are assumed to reverse in
subsequent periods.
- Government spending includes:
o increases in direct government spending on a product (vg);
o increases in public service sector purchases of the commodity (vf); or
o increases in investment (cgds) spending on electronics and communications.
These expenditures are swapped with the relevant distribution parameters shown in Table D-3. The choice between using direct government
purchases (vg) or funneling money through the public sector (vf) depended on which of these bought these goods or services in the base data. For
instance, government buys mostly public services, education and health. The public service then purchases electronics, construction, transportation,
communication and financial services.
29
The survey provided answers for declines over the last 6 months (i.e., 6-month declines in demand). In order to convert these into shocks for the model they are
halved as the way in which they were calculated they suggest total changes.
30
The declines represent the fact that by 2021 less people are admitted to hospitals and hence health expenditures are falling relative to the previous period.
27
The direct shocks to government spending over time are provided in Table D-8 below. Again, the increases are one-offs, leading to their removal in
subsequent periods.
- Assistance to businesses and corporate tax relief are implemented as subsidies to businesses’ labor and capital (tfe) or, while a business was subject
to mandatory closures, direct payments to households (dppriv). Amounts received were converted into changes in the power of the tax and
implemented as shocks and reversed as subsidies were later removed.
The fiscal stimulus was paid for by increased borrowing (i.e., using savings). As total government spending increases, savings fall automatically.
The shocks are obtained by taking the increase in cash payments or government spending as a share of the total annual private consumption or
government spending of the commodity, respectively. We assumed that a portion of the unemployment benefits and cash payments were saved and
hence had no impact on the results. The portion saved depended on the type of payment and was based on the data collected on savings rates discussed
in Section 5. Using these data as a guide, we assumed that the share of the cash payment saved (36%) was higher than the share saved from un
employment benefits (7.8%), reflecting the fact that unemployed households were found to have lower savings rates during the pandemic than
households in general.31 Further information on the fiscal policy simulations and results is available in Walmsley et al., 2022a.
Table D7
Shocks to private expenditure to capture unemployment benefits, direct cash payments and
relevant business subsidies
Rounds 1-4 Round 5 Round 6
2020_1 1.37 0.00 0.00

2020_2 1.37 0.00 0.00
2021_1 − 2.21 0.98 0.15
2021_2 0.00 0.00 3.69
2022_1 − 0.53 − 0.96 − 3.49
2022_2 − 0.01 0.00 0.36
2023_1 − 0.01 0.00 0.36
2023_2 − 0.01 0.00 0.02
Table D8
Shocks to government spending
Public sector servicesa Education Healthb
2020_1 5.85 0.26 3.48

2020_2 5.52 0.26 3.39
2021_1 − 6.51 3.09 1.53
2021_2 21.52 2.24 3.87
2022_1 − 15.39 2.23 − 5.23
2022_2 0.00 0.00 0.00
2023_1 − 3.18 − 1.70 − 3.57
2023_2 0.00 0.00 0.00
a
Public sector then used this money to increase spending on electronics, construction, trans
portation, communication and the financial services.
b
Health allocated this to pharmaceuticals.
Appendix E. Sectoral Impacts – Appendix to Section 7

Table E1
Percent Changes in Sectoral Production in First Semi-annual Period of 2020 Due to Pandemic, Decomposed by Causal Effect (cumulative percent differences from
baseline)
Mandatory closures Avoidance Labor Health Rounds 1-4 Round 5 Round 6 Pent-up demand Total
Wheat − 3 − 2 0 0 9 0 0 0 5
Cereal grains nec − 10 − 5 0 0 9 0 0 0 − 6
Vegetables, fruit, nuts − 7 − 2 0 0 9 0 0 − 3 0
Oil seeds − 5 − 2 0 0 9 0 0 0 2
Sugar cane, sugar beet − 12 − 7 0 0 10 0 0 1 − 9
Plant-based fibers − 16 − 6 0 0 12 0 0 − 1 − 11
Crops nec − 19 − 8 0 1 33 0 0 − 1 0
31
An issue was the extent to which sectors subject to mandatory closures could respond to the loans and other fiscal stimulus. While we assumed that all sectors
could respond to the fiscal stimulus, we adjusted the amount of the loans by assuming that the portion of the loans provided to closed businesses went directly to the
business owners and workers of those businesses, rather than through the businesses themselves. This limited the extent to which closed businesses responded to the
fiscal stimulus, at least partially addressing some of the issues raised by Chetty et al. (2020) discussed in Section 5. We also ran an alternative set of simulations to
capture the impact of fiscal policy, assuming that those sectors subject to mandatory closures could not respond to the fiscal stimulus. We found that limiting the
extent to which closed businesses could respond reduced the overall gains from the fiscal stimulus, particularly in the earlier rounds when more businesses were
closed. Since each round of fiscal stimulus is temporary, the unemployment benefits, cash payments, loans, etc., are reversed in the following period/s, often to be
re-introduced in the next round of fiscal stimulus.
28
Table E1 (continued )
Mandatory closures Avoidance Labor Health Rounds 1-4 Round 5 Round 6 Pent-up demand Total
Bovine cattle, sheep and goats, horses − 8 − 5 0 0 11 0 0 − 1 − 2

Animal products nec − 10 − 5 0 0 10 0 0 0 − 6
Raw milk − 10 − 8 0 0 10 0 0 0 − 8
Wool, silk-worm cocoons − 26 − 8 0 1 45 0 0 0 0
Forestry − 30 − 10 0 1 11 0 0 0 − 30
Fishing − 16 − 11 0 1 21 0 0 3 − 9
Coal − 19 − 9 0 1 10 0 0 2 − 19
Oil − 31 − 15 0 1 15 0 0 2 − 32
Gas − 17 − 6 0 1 29 0 0 0 0
Minerals nec − 25 − 5 0 0 13 0 0 1 − 20
Bovine meat products − 7 − 4 0 0 11 0 0 − 1 − 2
Meat products nec − 8 − 4 0 0 11 0 0 0 − 2
Vegetable oils and fats − 12 − 5 0 0 14 0 0 1 − 4
Dairy products − 11 − 9 0 1 11 0 0 1 − 10
Processed rice − 12 − 2 0 0 10 0 0 − 2 − 5
Sugar − 12 − 7 0 1 11 0 0 1 − 10
Food products nec − 11 − 6 0 0 8 0 0 0 − 9
Beverages and tobacco products − 42 − 25 0 3 10 0 0 1 − 51
Textiles − 36 − 18 0 2 17 0 0 − 1 − 38
Wearing apparel − 43 − 26 0 3 21 0 0 − 4 − 47
Leather products − 40 − 21 0 2 35 0 0 − 2 − 34
Wood products − 28 − 6 0 1 9 0 0 0 − 26
Paper products, publishing − 30 − 17 0 1 15 0 0 3 − 32
Petroleum, coal products − 31 − 16 0 1 11 0 0 2 − 35
Chemical products − 31 − 13 0 1 16 0 0 0 − 30
Basic pharmaceutical products − 15 − 35 0 2 22 0 0 7 − 31
Rubber and plastic products − 35 − 12 0 1 17 0 0 1 − 33
Mineral products nec − 37 − 7 0 1 18 0 0 1 − 30
Ferrous metals − 29 − 6 0 1 17 0 0 0 − 21
Metals nec − 29 − 5 0 1 23 0 0 1 − 17
Metal products − 28 − 7 0 1 15 0 0 1 − 23
Computer, electronic and optical products − 39 − 6 0 1 32 0 0 1 − 25
Electrical equipment − 29 − 5 0 1 18 0 0 0 − 19
Machinery and equipment nec − 26 − 4 0 0 15 0 0 0 − 17
Motor vehicles and parts − 32 − 10 0 1 13 0 0 − 1 − 31
Transport equipment nec − 25 − 3 0 0 34 0 0 0 − 2
Manufactures nec − 38 − 15 0 1 20 0 0 2 − 35
Electricity − 19 − 10 0 1 10 0 0 2 − 19
Gas manufacture, distribution − 16 − 9 0 1 10 0 0 1 − 15
Water − 11 − 7 0 0 8 0 0 1 − 10
Construction − 22 − 2 0 0 6 0 0 0 − 19
Trade − 38 − 20 0 2 13 0 0 10 − 43
Accommodation, Food and service activities − 46 − 46 0 5 21 0 0 47 − 63
Transport nec − 31 − 15 0 1 13 0 0 2 − 33
Water transport − 31 − 13 0 1 11 0 0 2 − 32
Air transport − 36 − 20 0 2 21 0 0 11 − 37
Warehousing and support activities − 32 − 15 0 1 14 0 0 2 − 33
Communication − 34 − 19 0 2 12 0 0 3 − 39
Financial services nec − 37 − 20 0 2 11 0 0 2 − 43
Insurance − 42 − 26 0 3 11 0 0 − 2 − 51
Real estate activities − 36 − 26 0 3 12 0 0 49 − 46
Business services nec − 28 − 17 0 1 16 0 0 4 − 30
Recreational and other services − 51 − 32 0 4 15 0 0 22 − 60
Public Administration and defense − 14 1 0 − 1 13 0 0 0 − 2
Education − 32 − 8 0 1 7 0 0 − 2 − 33
Human health and social work activities 0 − 53 0 4 14 0 0 22 − 45
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Economic Modelling 120 (2023) 106147

Contents lists available at ScienceDirect

Macroeconomic consequences of the COVID-19 pandemic☆

interventions continue unchanged from July 2021 onwards.

Sums of semi-annual periods may not equal total due to rounding.

the status of mandatory closures/reopenings, CDC reports and other Table 3

5.5. U.S. Federal government fiscal stimulus legislation

specific distribution parameters can be used to incorporate changes in /

EP(i,k,r) are the cross-price elasticities between commodities i and k

mand. For more details on incorporating willingness to pay (distribution

The unemployment rate is determined endogenously through an 7. Results

Supplementary data to this article can be found online at https://doi.org/10.1016/j.econmod.2022.106147.

Appendix A. Health Considerations – Appendix to Section 3

A1. Summary of Expert Interviews

A2. Estimating the Number of Infected International Travelers

Jan 5,836,439 58,033,637 61,610,519 106.2% 46.5% 55.5%

Jul 7,702,922 75,281,255 22,878,828 30.4% 49.4%

Fig. A 1. Probability of Infection by Region, by Month.

A3. Vaccination projections

A4. Reduction in R0 in each scenario

Fig. A 3a. Scenario 1 - Percent Reductions in R0 for 2020–22.

Fig. A 3b. Scenario 2 - Percent Reductions in R0 for 2020–22.

Year Deaths <65 Deaths 65+ Total

2015–2016 5248 17,458 22,706

2017–2018 10,197 50,903 61,100

Fig. A3c. Scenario 3a - Percent Reductions in R0 for 2020–22.

Fig. A 3d. Scenario 3b - Percent Reductions in R0 for 2020–22. .

A5. Viral Seasonality

A6. Estimates of Hospitalizations and Deaths by Scenario, Period, and Age

Hospitalizations <65 Hospitalizations 65+

H2/2021 133.9 49.2 7.8 11.0 364.9 19.5 5.7 7.7

Deaths <65 Deaths 65+

Fig. A4. Graphs of Cumulative Predicted Deaths for the 4 Scenarios.

Appendix B. Economic Data – Appendix to Section 4

# Sector Mandatory Closure % Reduction in U. % Reduction in U.S. annual

2020_1 2020_2 2020_1 2020_2 2021_1

Age Group Hospital Cost Outpatients (with mild symptoms)

0–19 $15,620 $55,542 $91

Scenario 1 6211 125,952 82,265 214,427 8.35%

Age Group Hospital LOS Productivity Days Loss Outpatient

0–19 4.0 9.4 11.5 18.9 1.5 8.5

Scenario 1 392,153 78,665 25,350 113,700 609,868 − 0.59%

Appendix C. Physical Stimulus Bills – Appendix to Section 4

C1. Summary of COVID-19 Stimulus Bills

Stimulus Bill Date Enacted Main Provisions Estimated Spending

C2. Stimulus Implementation and Impact

C3. Data Refinement

1–4 Unemployment Assistance 222.0 49.9 0.0 0.0 0.0 272.0

Appendix D. Modeling the Impact of Causal Factors – Appendix to Section 5

D1. Model and Time

Shocks are given to the following variables:

- Time (0.5 since the period length is ½)

D3. Policy simulations

Variable in model Description Variable in model used for Description

Consumption of Essential goods was fixed

Variable shocked Shocks (based on Table B-1)

Decline in the workforce due to deaths and illness

Labor force (qedusup, not in GTAP) Population (pop)

2020_1 − 0.12 − 0.04