Pandemic lockdown: The role of government commitment

This paper studies lockdown policy in a dynamic economy without government commitment. Lockdown imposes cap on labor supply, which improves health prospects at the cost of economic output and consumption. A would like to commit extent future lockdowns order guarantee an outlook that supports efficient levels investment into intermediate inputs. However, such commitment is not credible, since investments are sunk time when chooses lockdown. As result, under lack deviates from optimal policy. Rules limit government's discretion can improve social welfare, even presence noncontractible information. Quantitatively, causes be significantly more severe than socially optimal. The consumption loss due greater for higher input shares, discount rates, values life, disease transmission rates outside work, longer vaccine arrival times.