The Macroeconomics of Pandemics in Developing Countries: An Application to Uganda

Abstract

How should policies to control the SARS-CoV-2 pandemic differ across countries? We extend recent contributions integrating economic and epidemiological models for the United States to a developing country context, Uganda. Differences in demography, comorbidities, and health systems affect mortality risk; lower incomes affect agents’ willingness to forego consumption to reduce disease risk. For a broad range of life valuations supported by the literature, optimal containment is significantly less restrictive in the latter context, a normative implication contradicted by positive findings of similarly strict lockdowns across rich and poor countries. We explore biased beliefs about infection risk as a possible explanation.