Estimates of a ‘Pandemic Taylor rule’ loss function

This article applies a central bank-style loss function to policymaker decision-making during the Covid-19 pandemic. An empirical Taylor rule-style model is used to estimate preference weights associated with lost economic activity and Covid-19 cases and deaths for the four largest US states. Results demonstrate that there are preference differences across states with Republican-led states placing greater weight on economic loss than do those with Democrat governors. Moreover, all states in the sample responded to changes in Covid over the sample period.