Macroeconomics::

Macroeconomics in the times of COVID-19: a stochastic dynamic equilibrium analysis for Colombia (Working paper).

Human lives are threatened by the outbreak of the new disease Coronavirus 2019 (COVID-19). It is causing strong havoc in the world economy and its expansion has exceeded any pessimistic expectation, reaching on Wednesday May 27, 2020 to register more than five million confirmed cases of SARS-CoV-2 in the world, leaving more than 355 thousand dead and with presence in 188 countries according to the count of the American Johns Hopkins University. Dynamic stochastic models (DSGE) can be used because they allow us to investigate the joint effects of the pandemic on the future trajectory of economic activity. The costs of distancing are far from marginal: they can translate into significant declines in societal output; poverty, misery and despair for disadvantaged groups; and significant reductions in the future capacity to generate wealth and welfare. An analysis of the impact of the pandemic on the Colombian economy was developed under a Dynamic Stochastic General Equilibrium (DSGE) framework, a weekly frequency that allows the integration of the standard SIR epidemiological model for the analysis of the economic effects of the spread of COVID-19 in the country. Social distancing measures are necessary to contain contagion. However, its negative effects on economic activity are intense and increasing; simulations with different containment scenarios result in a decrease in GDP between 2.73% and 11.50%, and with an average job loss between 793 and 3457. This, of course, generates immense challenges for the public administration, which will have to adequately weigh benefits and costs, and ensure that vulnerable social groups are protected.