This paper studies the optimal long-run public intervention in a two-period OLG model where the probability of surviving the first period and the length of the second period can be influenced by distinct policies. While the optimal size of public intervention depends on the extra-productivity of public spendings in longevity, its optimal structure is determined by (1) differences in the productivity of each policy; (2) how growth would influence each longevity aspect under laissez-faire; (3) the dependence of each longevity aspect on past achievements. Given competing effects, the optimal intervention can hardly, under additive expected lifetime utility, be strongly unbalanced.
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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number
CESifo Working Paper No. 1780.
Find related papers by JEL classification: E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health I12 - Health, Education, and Welfare - - Health - - - Health Production O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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