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Health Cycles and Health Transitions

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  • Chakraborty, Shankha
  • Papageorgiou, Chris
  • Perez Sebastian, Fidel

Abstract

We study the dynamics of poverty and health in a model of endogenous growth and rational health behavior. Population health depends on the prevalence of infectious diseases that can be avoided through costly prevention. The incentive to do so comes from the negative effects of ill health on the quality and quantity of life. The model can generate a poverty trap where infectious diseases cycle between high and low prevalence. These cycles originate from the rationality of preventive behavior in contrast to the predator-prey dynamics of epidemiological models. We calibrate the model to reflect sub-Saharan Africa's recent economic recovery and analyze policy alternatives. Unconditional transfers are found to improve welfare relative to conditional health-based transfers: at low income levels, income growth (quality of life) is valued more than improvements to health (quantity of life).

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50588.

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Date of creation: 10 Oct 2013
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Handle: RePEc:pra:mprapa:50588

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Related research

Keywords: Infectious Disease; Cycles; Economic Epidemiology; Morbidity; Mortality; Conditional Transfers; Unconditional Transfers;

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  1. Guvenen, Fatih, 2006. "Reconciling conflicting evidence on the elasticity of intertemporal substitution: A macroeconomic perspective," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1451-1472, October.
  2. Mishra, Prachi & Newhouse, David, 2009. "Does health aid matter?," Journal of Health Economics, Elsevier, vol. 28(4), pages 855-872, July.
  3. 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.
  4. William Easterly, 2009. "Can the West Save Africa?," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 373-447, June.
  5. Chris Papageorgiou & Fidel Pérez Sebastián & Shankha Chakraborty, 2010. "Diseases, infection dynamics and development," Working Papers. Serie AD 2010-28, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  6. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005. "The Quantity and Quality of Life and the Evolution of World Inequality," American Economic Review, American Economic Association, vol. 95(1), pages 277-291, March.
  7. Alwyn Young, 2005. "The Gift of the Dying: The Tragedy of Aids and the Welfare of Future African Generations," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 423-466, May.
  8. Geoffard, P.Y. & Philipson, T., 1995. "Rational Epidemics and their Public Control," DELTA Working Papers 95-15, DELTA (Ecole normale supérieure).
  9. Janet Currie & Firouz Gahvari, 2007. "Transfers in Cash and In Kind: Theory Meets the Data," NBER Working Papers 13557, National Bureau of Economic Research, Inc.
  10. Aditya Goenka & Lin Liu, 2012. "Infectious diseases and endogenous fluctuations," Economic Theory, Springer, vol. 50(1), pages 125-149, May.
  11. Aditya Goenkay & Lin Liu & Manh-Hung Nguyen, 2013. "Infectious Diseases and Economic Growth," Working Papers 06, Development and Policies Research Center (DEPOCEN), Vietnam.
  12. Jose G. Montalvo & Marta Reynal-Querol, 2007. "Fighting against Malaria: Prevent Wars while Waiting for the "Miraculous" Vaccine," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 165-177, February.
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