Using a simple overlapping generations small open economy, we show that endogenous longevity – through public health expenditure – may reduce both the saving rate and per capita domestic income, while increasing the per capita foreign debt in a country. Moreover, despite funding public health capital is always beneficial for life expectancy, it may or may not represent a Pareto improvement with respect to the laissez-faire solution depending on whether the world interest rate is high or low enough, respectively.
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Paper provided by Dipartimento di Scienze Economiche (DSE), University of Pisa, Pisa, Italy in its series Discussion Papers with number
2009/92.
Find related papers by JEL classification: I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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