Adaptive cyclic exit strategies from lockdown to suppress COVID-19 and allow economic activity

Omer Karin; Yinon M. Bar-On; Tomer Milo; Itay Katzir; Avi Mayo; Yael Korem; Boaz Dudovich; Amos J. Zehavi; Nadav Davidovich; Ron Milo; Uri Alon

Finally, governments across the world comprehend that the Covid-19 crisis requires expansive government investment to avert an economic and humanitarian disaster. However, this implies running deficits. The cyclic strategy does not mean that the government can simply trust the private sector to pay wages on par with the norm during the pre-crisis era. Given depressed demand, absent government subsidies many businesses would be unable to cover their costs in full, even if workers receive only compensation for part-time work. In addition, without government supplements many families would be unable to make ends meet even assuming that the breadwinners work part time. Nevertheless, the fact that some production would continue implies that the private sector shortfall that the government needs to cover would be smaller than what would be the case under full lockdown. As a result, government fiscal burden would be lighter under a cyclic strategy than full lockdown mode.