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A Predator-Prey Model of Unemployment and W-shaped Recession in the COVID-19 Pandemic

Author

Listed:
  • Maria Cristina Barbieri Góes

    (Department of Economics, Università degli Studi Roma Tre)

  • Ettore Gallo

    (Department of Economics, New School for Social Research)

Abstract

The paper presents a predator-prey model which captures the interactions between unemployment rate and COVID-19 infection rate. The model shows that lockdown measures can effectively reduce the infection rate, but at the cost of higher unemployment rate. The solution of the system makes the case for an endemic equilibrium of COVID-19 infections, hence producing waves in the unemployment rate in the absence of widespread immunity and/or vaccination. Furthermore, we simulate the model, calibrating it for the US. The simulation shows the dramatic effects on unemployment and on overall economic activity produced by potential recurrent waves of COVID-19, leading to a series of W-shaped recessions that - in absence of adequate policy response - jeopardize the coming back to the normal trend in the medium run.

Suggested Citation

  • Maria Cristina Barbieri Góes & Ettore Gallo, 2020. "A Predator-Prey Model of Unemployment and W-shaped Recession in the COVID-19 Pandemic," Working Papers 2006, New School for Social Research, Department of Economics.
    • Handle: RePEc:new:wpaper:2006
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    Download full text from publisher

    File URL: http://www.economicpolicyresearch.org/econ/2020/NSSR_WP_062020.pdf
    File Function: First version, 2020
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    References listed on IDEAS

    as
    1. Shaikh, Anwar, 2016. "Capitalism: Competition, Conflict, Crises," OUP Catalogue, Oxford University Press, number 9780199390632.
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    Cited by:

    1. Nur Khairlida Muhamad Khair & Khai Ern Lee & Mazlin Mokhtar, 2021. "Community-Based Monitoring in the New Normal: A Strategy for Tackling the COVID-19 Pandemic in Malaysia," IJERPH, MDPI, vol. 18(13), pages 1-22, June.

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    More about this item

    Keywords

    COVID-19; unemployment rate; jobless recovery; W-shaped recession;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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