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Public expenditure on health and private old-age insurance in an OLG growth model with endogenous fertility: chaotic cycles under perfect foresight

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  • Fanti, Luciano
  • Gori, Luca

Abstract

This paper analyses the dynamics of a simple overlapping generations economy with endogenous longevity, endogenous fertility and private transfers from children to parents. In this context, it is shown that both the public provision of health care services, which determines the individual length of life, and the size of the intra-family transfer may be a source of chaotic cycles when individuals are perfect foresighted. However, such economic factors also have the potential to ultimately suppress undesirable chaotic fluctuations. This suggests that the equilibrium dynamics of an OLG growth model may endogenously reconcile the existence of both irregular business cycles and the global stability of the economic system.

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File URL: http://mpra.ub.uni-muenchen.de/23697/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23697.

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Date of creation: 06 Jul 2010
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Handle: RePEc:pra:mprapa:23697

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Keywords: Endogenous fertility; OLG model; Perfect foresight; Private old-age support; Public health care services;

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