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Longevity and environmental quality in an OLG model

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  • Pierre-André Jouvet
  • Pierre Pestieau
  • Gregory Ponthiere

    ()

Abstract

Whereas existing OLG models with endogenous longevity neglect the impact of environmental quality on mortality, this paper studies the design of the optimal public intervention in a two-period OLG model where longevity is influenced positively by health expenditures, but negatively by pollution due to production. It is shown that if individuals, when choosing how much to spend on health, do not internalize the impact of their decision on environmental quality (i.e. the space available for each person), the decentralization of the social optimum requires a tax not only on capital income, but also, on health expenditures. The sensitivity of the optimal second-best public intervention is also explored numerically..

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s00712-010-0142-3
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Bibliographic Info

Article provided by Springer in its journal Journal of Economics.

Volume (Year): 100 (2010)
Issue (Month): 3 (July)
Pages: 191-216

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Handle: RePEc:kap:jeczfn:v:100:y:2010:i:3:p:191-216

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Web page: http://www.springerlink.com/link.asp?id=108909

Related research

Keywords: Longevity; Health care; Natural environment; Pollution; E13; E21; I18; Q56;

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  1. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
  2. LEROUX, Marie-Louise & PESTIEAU, Pierre & PONTHIERE, Grégory, . "Optimal linear taxation under endogenous longevity," CORE Discussion Papers RP -2268, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Jouvet, Pierre-Andre & Michel, Philippe & Vidal, Jean-Pierre, 2000. " Intergenerational Altruism and the Environment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 135-50, March.
  4. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, number 9780521001151, October.
  5. Martin Browning & Lars Peter Hansen & James J. Heckman, 1999. "Micro Data and General Equilibrium Models," Discussion Papers 99-10, University of Copenhagen. Department of Economics.
  6. John, A. & Pecchenino, R. & Schimmelpfennig, D. & Schreft, S., 1995. "Short-lived agents and the long-lived environment," Journal of Public Economics, Elsevier, vol. 58(1), pages 127-141, September.
  7. Philippe Michel & Gilles Rotillon, 1995. "Disutility of pollution and endogenous growth," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(3), pages 279-300, October.
  8. Victoria Cramer & Svenn Torgersen & Einar Kringlen, 2004. "Quality of Life in a City: The Effect of Population Density," Social Indicators Research, Springer, vol. 69(1), pages 103-116, October.
  9. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  10. Pierre Pestieau & Gregory Ponthiere & Motohiro Sato, 2008. "Longevity, Health Spending, and Pay-as-you-Go Pensions," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(1), pages 1-18, March.
  11. Jie Zhang & Junsen Zhang & Michael Leung, 2006. "Health investment, saving, and public policy," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 68-93, February.
  12. Bhattacharya, Joydeep & Qiao, Xue, 2005. "Public and Private Expenditures on Health in a Growth Model," Staff General Research Papers 12378, Iowa State University, Department of Economics.
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