The Multi-Compartment SI(RD) Model with Regime Switching: An Application to COVID-19 Pandemic

We study—with existence and unicity results—a variant of the SIR model for an infectious disease incorporating both the possibility of a death outcome—in a short period of time—and a regime switch that can account for the mitigation measures used to control the spreading of the infections, such as a total lockdown. This model is parametrised by three parameters: the basic reproduction number, the mortality rate of the infected, and the duration of the disease. We discuss a particular example of application to Portuguese COVID-19 data in two short periods just after the start of the epidemic in 4 March 2020, with the first two cases dated that day. We propose a simple and effective method for the estimation of the main parameters of the disease, namely, the basic reproduction number and the mortality rate of the infected. We correct these estimated values to take into account the asymptomatic non-diagnosed members of the population. We compare the outcome of the model in the cases of the existence, or not, of a regime switch, and under three different scenarios, with a remarkable agreement between model and data deaths in the case of our basis scenario. In a final short remark, we deal with the existence of symmetries for the proposed model.

Inflation Dynamics and Exchange Rate Pass-Through in Nigeria: Evidence from Augmented Nonlinear New Keynesian Philips Curve

This paper estimates a nonlinear augmented New Keynesian Philips Curve for Nigeria using the Smooth Transition Regression model for the period 1995Q1 to 2018Q2. The empirical evidence reveals the existence of two inflation regimes during the period under review. Food inflation, energy inflation, firms’ marginal cost, and imported inflation account for most of the changes in the prices of composite consumers’ basket in low exchange rate depreciation regime. However, the exchange rate solely explains price changes in the composite consumers’ basket when inflation switches to high regime. Similarly, the results show that regime change in inflation is largely caused by exchange rate (transition variable) depreciation or devaluation of the naira. Furthermore, the paper finds that the threshold in exchange rate devaluation (depreciation) that triggers a regime switch from low to high inflation regime is about N75 relative to a dollar. The speed of regime switch was found to be significantly high at about 70% per quarter. The paper argues that achieving exchange rate stability is a necessary condition for disinflation during this regime. Therefore, this paper recommends that monetary policy response to low inflation regime must target the various components of the consumption basket while effort to curtail persistent high inflation must include a stable exchange rate of the naira.