  This paper combines a canonical epidemiology model of disease dynamics with
government policy of lockdown and testing, and agents' decision to social
distance in order to avoid getting infected. The model is calibrated with data
on deaths and testing outcomes in the Unites States. It is shown that an
intermediate but prolonged lockdown is socially optimal when both mortality and
GDP are taken into account. This is because the government wants the economy to
keep producing some output and the slack in reducing infection is picked up by
social distancing agents. Social distancing best responds to the optimal
government policy to keep the effective reproductive number at one and avoid
multiple waves through the pandemic. Calibration shows testing to have been
effective, but it could have been even more instrumental if it had been
aggressively pursued from the beginning of the pandemic. Not having any
lockdown or shutting down social distancing would have had extreme
consequences. Greater centralized control on social activities would have
mitigated further the spread of the pandemic.
