Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses

ABSTRACT

We discuss and review literature on the macroeconomic effects of epidemics and pan-demics since the late twentieth century. First, we cover the role of health in driv -ing economic growth and well-being and discuss standard frameworks for assessing the economic burden of infectious diseases. Second, we sketch a general theoretical framework to evaluate the trade-offs policy makers must consider when addressing infectious diseases and their macroeconomic repercussions. In so doing, we emphasize the dependence of economic consequences on (i) disease characteristics;(ii) inequal-ities among individuals in terms of susceptibility, preferences, and income;and (iii) cross-country heterogeneities in terms of their institutional and macroeconomic environments. Third, we study pharmaceutical and nonpharmaceutical policies aimed at mitigating and preventing infectious diseases and their macroeconomic repercus-sions. Fourth, we discuss the health toll and economic impacts of five infectious dis-eases HIV/AIDS, malaria, tuberculosis, influenza, and COVID-19. Although major epidemics and pandemics can take an enormous human toll and impose a staggering economic burden, early and targeted health and economic policy interventions can often mitigate both to a substantial degree. (JEL E20, H50, I12, I14, I15, I18, J17)