# I. **Introduction**

The 2014 Ebola outbreak in Guinea, Liberia, and Sierra Leone calls attention to the painful economic and human costs of pandemics if the spread is unchecked (World Bank 2014). Drugimpervious infections from antimicrobial resistance (AMR) are particularly worrisome because the risks are substantial but yet uncertain. Like climate change, AMR is a slowly unfolding future shock. Its impact will depend not only on its progression, its detrimental impact on human health and morbidity, livestock production, and many other unforeseen effects, but also on the policy measures taken today and in the future. For these reasons, recent studies have relied on forwardlooking simulations based on increasingly complex economic models to capture the interactions of AMR with human health and the economy; microeconomic assessments of the impact of AMR on labor supply and productivity provide plausible assumptions for these simulations.

This paper advances the methodology used to analyze the economic impacts of AMR. First, it uses a well-defined global general equilibrium model with channels for AMR to affect the economy through health costs, labor supply, labor productivity, livestock production and trade costs. Sectors interact within economies and across countries through bilateral trade links and resource flows. Second, it traces the global effects on poverty, especially in developing countries, by employing a global microsimulation framework that draws on harmonized household surveys that cover around 85% of world population. Finally, to account for the significant uncertainty about the future progression of AMR, the analysis uses expert microeconomic and or meta-studies to form low-, mid-, and high-case scenarios for the severity of its impact via explicit channels. In what follows, we elaborate on the contributions of our analysis.

The magnitude of AMR’s future global impact depends on the interactions between the health (care) sector and the rest of the economy within each country and further repercussions across countries and regions. To capture not just the many health related issues caused by AMR, but their significant spill-over effects on other sectors of the economy, Smith et al. (2005) use a computable general equilibrium (CGE) model of the United Kingdom to estimate the full social costs and benefits of this health problem and its policy interventions. However, because they do not use a global model, they exclude cross-country interactions and do not address how effects differ across countries.

Using first principles, Rudholm (2002) stresses that, without a global view, the actions by individual countries that take the actions of their neighbors as exogenous would together lead to a suboptimal allocation of global resources. The paper focuses mainly on conceptual arguments and derivations in support of the need for a global perspective, thus leaving the empirical analysis to others. Taylor et al. (2014) combine good microeconomic assessments of AMR’s impact on human health with a global CGE analysis to estimate the impact with a worldwide perspective. They conduct a careful meta-analysis of results from various research studies on the impact of AMR on health and morbidity to determine likely changes in labor supplies in different regions. They 2