Competitive equilibrium versus social planner?
What are differences between competitive equilibrium and social planner solutions in pandemic macroeconomic models? Why is it interesting? The comparison shows the results of the pandemic shock for commonly defined macroeconomic aggregates and epidemic variables between a model with competitive equilibrium (MY_21) and a model with social planner solutions (BCG_21). What to do on the EPI-MMB? Models: MY_21, BCG_21 Shocks: Model specific shock: initial infections of < 0.001% of the population for MY_21 and initial infections of 0.1% the population for BCG_21 Variables: Consumption, Investment, Labour, Output, Susceptibles, Infected, Recovered, Deaths What is interesting? Notably, MY_21 predicts a deeper recession and a milder pandemic spread than BCG_21. One major contributing factor is the difference in equilibrium types between the two models. In BCG_21, individual agents make economic decisions while taking into account different infection rates and evolutions of the pandemic acros