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Fight the Pandemic, Save the Economy
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Fight the Pandemic, Save the Economy

Lessons from the 1918 Flu

Sergio Correia, Stephan Luck and Emil Verner
Federal Reserve Bank of New York, 2020
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Many business leaders and politicians worry about the financial pain the COVID-19 crisis is inflicting on the US economy. But do public health policies like social distancing and quarantines worsen a downturn? In this brief research note, economists Sergio Correia, Stephan Luck and Emil Verner examine what happened during and after the 1918 flu pandemic for clues about COVID-19’s eventual economic impacts. They conclude that healthy people and a healthy economy are both possible.

Summary

The 1918 influenza outbreak offers insights about the potential duration and severity of COVID-19’s economic damage.

Public health policies to stop the spread of COVID-19, such as social distancing, quarantines and business closures, have reduced economic activity, but the disease’s longer term impacts are unknowable. Studying the 1918 influenza pandemic may offer some insights. That health crisis, which claimed anywhere from 550,000 to 675,000 American lives between January 1918 and December 1920, was the largest flu outbreak in US history.

The responses to COVID-19 today – lockdowns, public...

About the Authors

Sergio Correia is an economist at the Board of Governors of the Federal Reserve System. Stephan Luck is an economist at the Federal Reserve Bank of New York. Emil Verner is an assistant professor of finance at the MIT Sloan School of Management.

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