Optimal allocations to heterogeneous agents with an application to stimulus checks

A planner allocates discrete transfers of size Dg to N heterogeneous groups labeled g and has CES preferences over the resulting outcomes, Hg(Dg). We derive a closed-form solution for optimally allocating a fixed budget subject to group-specific inequality constraints under the assumption that increments in the Hg functions are non-increasing. We illustrate our method by studying allocations of “support checks” from the U.S. government to households during both the Great Recession and the COVID-19 pandemic. We compare the actual allocations to optimal ones under alternative constraints, assuming the government focused on stimulating aggregate consumption during the 2008–2009 crisis and focused on welfare during the 2020–2021 crisis. The inputs for this analysis are obtained from versions of a life-cycle model with heterogeneous households, which predicts household-type-specific consumption and welfare responses to tax rebates and cash transfers.

Assessing Food Poverty, Vulnerability and Food Consumption Inequality in the Context of COVID-19: A Case of Bangladesh.

There is no denying the fact that, for a developing country like Bangladesh, the economic consequences of lockdown for containing COVID-19 pandemic can be far reaching affecting livelihoods of millions of households. Given that the share of food consumption expenditure to total expenditure is higher in the lower income groups of Bangladesh, this shock is expected to directly affect affordability of consumption of basic food items of these households. Using nationally representative household survey data of Bangladesh, and while following the Feasible Generalized Least Square method, this paper attempts to examine food poverty, food consumption inequality along with vulnerability to food poverty of households and explores the importance of different socio-demographic and environmental factors in this connection. Our estimation reflects that, greater percentage of households with young children or with elderly people are found to suffer high food vulnerability. In addition, households in environmentally endangered regions e.g. drought prone areas or river erosion affected places are more food vulnerable than those in other parts of the country. Certain occupation groups e.g. day labourer and self-employed are found to be highly vulnerable to food poverty while according to our decomposition analysis of food consumption inequality, area of residence (urban vs. rural) is expected to cause sizable inequality in food consumption. This study can therefore, help in identifying food vulnerable households for government's social protection programs and COVID-19 incentive packages, and thereby can contribute towards designing effective poverty reduction strategies.