On the Golden Rule of capital accumulation under endogenous longevity

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On the Golden Rule of capital accumulation under endogenous longevity

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David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

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David de la Croix

Abstract

This note derives the Golden Rule of capital accumulation in a Chakraborty-type economy, i.e. a two-period OLG economy where longevity is endogenous. It is shown that the capital per worker maximizing steady-state consumption per head is inferior to the Golden Rule capital level prevailing under exogenous longevity. We characterize also the lifetime Golden Rule, that is, the capital per worker maximizing steady-state expected lifetime consumption per head, and show that this tends to exceed the standard Golden Rule capital level.

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Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008032.

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Date of creation: 02 Dec 2008
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Handle: RePEc:ctl:louvec:2008032

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Paper
- DE LA CROIX, David & PONTHIéRE, GrŽgory, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," CORE Discussion Papers 2008049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
- David de la Croix & Grégory Ponthière, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," PSE Working Papers 2008-48, PSE (Ecole normale supérieure). [Downloadable!]

Find related papers by JEL classification:
E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
I12 - Health, Education, and Welfare - - Health - - - Health Production

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-12-14 (All new papers)
NEP-CBA-2008-12-14 (Central Banking)
NEP-DGE-2008-12-14 (Dynamic General Equilibrium)
NEP-HEA-2008-12-14 (Health Economics)
NEP-MAC-2008-12-14 (Macroeconomics)

References listed on IDEAS
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Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May. [Downloadable!] (restricted)
Other versions:
- Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002. [Downloadable!]
Shankha Chakraborty & Mausumi Das, 2004. "Mortality, Human Capital and Persistent Inequality," Econometric Society 2004 North American Summer Meetings 100, Econometric Society. [Downloadable!]
Other versions:
- Shankha Chakraborty & Mausumi Das, 2003. "Mortality, Human Capital and Persistent Inequality," Working papers 119, Centre for Development Economics, Delhi School of Economics. [Downloadable!]
- Shankha Chakraborty & Mausumi Das, 2003. "Mortality, Human Capital and Persistent Inequality," University of Oregon Economics Department Working Papers 2003-11, University of Oregon Economics Department. [Downloadable!]
- Shankha Chakraborty & Mausumi Das, 2005. "Mortality, Human Capital and Persistent Inequality," Journal of Economic Growth, Springer, vol. 10(2), pages 159-192, 06. [Downloadable!] (restricted)
Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December. [Downloadable!]

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