
What are the possible economic effects of COVID-19 on the world economy? - troydavis
https://www.brookings.edu/blog/up-front/2020/03/06/what-are-the-possible-economic-effects-of-covid-19-on-the-world-economy-warwick-mckibbins-scenarios/
======
troydavis
From the interview:

> Q: You have seven scenarios for the COVID-19 virus. In the first three, the
> virus is contained to China; in the most extreme, a mild pandemic recurs
> each year for the foreseeable future. Let’s focus on your fourth scenario.
> Describe that.

> A: In scenario four, we assume that COVID-19 eventually affects all
> countries, but this pandemic is a one-time event and its severity is low.
> For China, we assume a 10% attack rate (10% of all people fall ill) and a 2%
> case fatality rate (2% of those who are ill subsequently die). We then use
> an Index of Vulnerability for each country, basically calibrating how much
> it is like or different from China, to estimate the effects of the virus in
> other countries. These assumptions are fed into the model to determine the
> severity of the outbreak in each country.

…

> The loss of real GDP, relative to what would have been the model prediction
> in 2020 without the virus, is approximately $US2.3 trillion for the world,
> which is 2% lower than the baseline. Of that, the US economy loses $US420
> billion in 2020, or about 2% less than the pre-virus baseline. Of course, if
> the virus spreads more widely or turns out to be more severe, the costs
> would be larger.

Full paper (open access): [https://cama.crawford.anu.edu.au/publication/cama-
working-pa...](https://cama.crawford.anu.edu.au/publication/cama-working-
paper-series/16221/global-macroeconomic-impacts-covid-19-seven-scenarios)

