Working paper

Covid-19 and a Green Recovery?

Aditya Goenka, Lin Liu, and Manh-Hung Nguyen


Preliminary evidence indicates that pollution increases severity and likelihood of Covid-19 infections as is the for many other infectious diseases. This paper models the interaction of pollution and preventive actions on transmission of infectious diseases in a neoclassical growth framework where households do not take into account how their actions affects disease transmission and production activity results in pollution which increases likelihood of infections. Household can take private actions for abatement of pollution as for controlling disease transmission. Disease dynamics follow SIS dynamics. We study the difference in health and economic outcomes between the decentralized economy, where households do not internalize the externalities, and the socially optimal outcomes, and characterize the taxes and subsidies that will decentralize the socially optimal outcomes. Thus, we examine the question whether there are sufficient incentives to reduce pollution, both at the private and public levels, once its effects on disease transmission is taken into account.


Covid-19, pollution, environmental policy, infectious disease, Green Recovery,; dynamic Pigovian taxes.;


Aditya Goenka, Lin Liu, and Manh-Hung Nguyen, Covid-19 and a Green Recovery?, TSE Working Paper, n. 20-1163, November 2020.

See also

Published in

TSE Working Paper, n. 20-1163, November 2020