Budgetary Impact of Accelerating COVID-19 Vaccination

This paper analyses the extent to which additional extraordinary public spending to accelerate vaccination might have been optimal in terms of minimising the public deficit. We use a budget model whose key variable is the present value of cumulative net government revenues over a period of time. The main finding of the paper is that there is an optimal level of expenditure that minimises the loss of net tax revenue. This level could be around 3.25 times the expenditure needed to vaccinate the entire population. The result seems quite robust to different assumptions about the contagion rate, the loss in the number of hours worked due to COVID-19, the rate assumed by the government in labour income replacement programmes, and the period of analysis considered.