Estimated benefits of incremental suppression of Covid-19 spread

Chi Keung WOO, Kang Hua CAO, Yun Lyndon LIU, Qiqi LI

Research output: Contribution to journalArticlespeer-review

Abstract

Estimated benefits are necessary for a cost benefit analysis of Covid-19 suppression. We propose a stock-market-based approach to estimate the benefits of incremental suppression of Covid-19’s spread that will last till no new cases are recorded for 14 days, the projected incubation period of Covid-19. This approach’s empirical implementation uses a) total capitalization of 14 market indices for large cap stocks; and b) an index’s estimated elasticity of cumulative confirmed cases (CCC) obtained from a panel data analysis of 727 daily observations in the period of 01/21/2020-04/03/2020. Our estimated benefits of a hypothetical 10% reduction in CCC due to incremental suppression are statistically significant (p-value < 0.05), ranging from US$0.76 billion for Singapore to US$70 billion for the US. As the S & P 500 index’s capitalization is 70% - 80% of the US total market capitalization, the adjusted US benefit estimate is up to US$100 billion. Finally, we verify that these estimated benefits are empirically reasonable. Copyright © 2020 by author(s) and OpenAccess Library Inc.
Original languageEnglish
Article numbere6645
JournalOpen Access Library Journal
Volume7
Issue number8
DOIs
Publication statusPublished - Aug 2020

Citation

Woo, C. K., Cao, K. H., Liu, Y. L., & Li, Q. (2020). Estimated benefits of incremental suppression of Covid-19 spread. Open Access Library Journal, 7(8). Retrieved from https://doi.org/10.4236/oalib.1106645

Keywords

  • Covid-19
  • Suppression benefit
  • Stock markets

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