Natalie Bachas and Arlene Wong, both assistant professsors of economics and JRCPPF faculty affiliates, receive a grant from Princeton University for a project that will evaluate the economic implications and cost of Covid-19 social distancing policies.
This project was one of seven faculty-led research initiatives selected through a competitive process. Princeton University established this rapid-funding mechanism in late-March to accelerate research on fundamental health, science and policy quetsions related to the Covid-19 pandemic.
Bachas and Wong will analyze data collected on the pandemic to investigate the macroeconomic effects of various government social distancing measures in order to evaluate the “optimal level" of social distancing that balances both economic and health outcomes. Using an event study framework, the researchers will estimate the magnitude and dynamics of the economic impacts of social distancing and their distribution. These estimates will help guide the policy debate on how to flatten both the infection curve and the economic cost curve. The researchers will also explore the economic spillovers of enforced business closures and evaluate the effectiveness of the policies such as government payouts to households.