Providing shelters or low income housing? An optimal control model

An optimal control model is developed to model the choice between short-ter m safety nets (shelter beds) and longer term investments (low income housin g) for the alleviation of literal homelessness (people sleeping on the stre et). Society's objective function depends negatively on literal homelessnes s and the budget expenditure to fight it. A steady-state saddle point solut ion is found. The model is extended to take into account incentive effects in the provision of shelters and leakage effects in the provision of low in come housing. Journal of Economic Literature Classificatin Numbers: H53, R2 1, C61. (C) 1999 Academic Press.