I estimate the Susceptible-Infected-Recovered (SIR) epidemic model using cross-country daily data on Coronavirus Disease 2019 (COVID-19) cases . The transmission rate is heterogeneous across countries and far exceeds the recovery rate, which enables a fast spread. The modelsuggests that around 30 percent of the population may be simultaneously infected in many countries at the peak, potentially overwhelming the healthcare system. Temporary measures aiming to reduce transmission are likely ineffective to mitigate the peak. An application to a stylized asset pricing model suggests that the stock price may decrease by 25-50\% during the epidemic, although the stock market crash is short-lived .
I estimate the Susceptible-Infected-Recovered (SIR) epidemic model for Coronavirus Disease 2019 (COVID-19) . The transmission rate is heterogeneous across countries and far exceeds the recovery rate, which enables a fast spread. In the benchmark model, 28\% of the population may be simultaneously infected at the peak, potentially overwhelming the healthcare system. The peak reduces to 6.2\% under the optimal mitigation policy that controls the timing and intensity of social distancing. A stylized asset pricing model suggests that the stock price temporarily decreases by 50\% in the benchmark case but shows a W-shaped, moderate but longer bear market under the optimal policy .
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using cross-country daily data on
for
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cases
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The modelsuggests that around 30 percent
In the benchmark model, 28\%
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in many countries
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Temporary measures aiming to reduce transmission are likely ineffective to mitigate the peak. An application to a
The peak reduces to 6.2\% under the optimal mitigation policy that controls the timing and intensity of social distancing. A
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may decrease by 25-50\% during the epidemic, although the stock market crash is short-lived
temporarily decreases by 50\% in the benchmark case but shows a W-shaped, moderate but longer bear market under the optimal policy