Optimal age- and sex-based management of the queue to ventilators during the Covid-19 crisis

Vaccine and inclusion

In majoritarian democracies, popular policies may not be inclusive, and inclusive policies may not be popular. This dilemma raises the crucial question of when it is possible to design a policy that is both inclusive and popular. We address this question in the context of vaccine allocation in a polarized economy facing a pandemic. In such an economy, individuals are organized around distinct networks and groups and have in-group preferences. We provide a complete characterization of the set of inclusive and popular vaccine allocations. The findings imply that the number of vaccine doses necessary to generate an inclusive and popular vaccine allocation is greater than the one necessary to obtain an allocation that is only popular. The analysis further reveals that it is always possible to design the decision-making rule of the economy to implement an inclusive and popular vaccine allocation. Under such a rule, the composition of any group endowed with the veto power should necessarily reflect the diversity of the society.

Optimal federal transfers during uncoordinated response to a pandemic

An outbreak of a deadly disease pushes policymakers to depress economic activity due to externalities associated with individual behavior. Sometimes, these decisions are left to local authorities (e.g., states). This creates another externality, as the outbreak doesn't respect states' boundaries. A strategic Pigouvian subsidy that rewards states which depress their economies more than the average corrects that externality by creating a race-to-the-bottom type of response. In a symmetric equilibrium nobody receives a subsidy, but the allocation is efficient. If states are concerned about unequal burden of the lockdown costs, but cannot easily issue new debt to finance transfer payments, then lock-downs will be insufficient in some areas and excessive in others. When that's the case, federal stimulus checks can limit the extent of local outbreaks.