NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Christian A. Moser

Columbia Business School
Uris Hall 819
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New York, NY 10027

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Institutional Affiliation: Columbia University

NBER Working Papers and Publications

April 2020Pandemic Lockdown: The Role of Government Commitment
with Pierre Yared: w27062
This paper studies optimal lockdown policies in a dynamic economy without government commitment. A lockdown imposes a cap on labor supply, which lowers economic output but improves health prospects. A government would like to commit to limit the extent of future lockdowns in order to increase investment by supporting a more optimistic economic outlook. However, such a commitment may not be credible since investment decisions are sunk at the time when the government decides on lockdowns. Rules that limit a government’s future policy discretion can improve the efficiency of lockdowns, even in the presence of noncontractible information.
 
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