The Case for Reopening Economies by Sector

The greatest challenge we face in the current crisis is striking the right balance between preventing not only the damage inflicted by Covid-19 but also that which comes from a severe contraction of economic activity.

This is a matter of both life and death, and prosperity or poverty, as a deep recession is likely to cause widespread hardship, including increased mortality rates for reasons other than the virus. We must, therefore, find smart strategies for reopening businesses while minimizing health risks.

As economists, we have explored a variety of options: a long lockdown, relaxation with rules, stop-and-go lockdowns, and phased-in lockdowns by age, geographic region within countries, and by country in sectoral waves. Our analyses suggest that, assuming that minimum epidemiological standards are met (declining new cases for one week or two weeks, adequate intensive care unit capacity and testing and tracing protocols), the latter approach — sequential opening of sectors starting with those least likely to generate a substantial resurgence of the virus — is the most promising.