C o r r e c t e d P r o o f Comments some idea of the costs of not intervening," and consider shocks to government expenditure to capture the policy effect. The approach looks innocuous considering the model frequency is annual. But the model could be extended to shed light on two channels related to the containment measures. The direct channel works by reducing the economic activity including withholding labor supply and rebalancing the consumption basket, of which effects are well reflected

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... the current model. We also need to notice that the indirect or compounding channel is likely to work. There exists a trade-off between the level of containment measures and the persistence of the health shock. In the case of COVID-19, lowering containment measures led to further waves, while the lockdown significantly reduced the spread. Hence, the policymakers' decision should include containment measures as well as monetary and fiscal measures. As pointed out in Abel and Panageas (2020), " [t]he key tradeoff facing the planner is that increased interaction leads to more output, but also more deaths from the disease." Recently, a model with the susceptible-infectious-removed (SIR) extension is explored to take the tradeoff into account.