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Diseases, infection dynamics, and development

  • Chakraborty, Shankha
  • Papageorgiou, Chris
  • Pérez Sebastián, Fidel

The relationship between health and development is a subject of ongoing debate. This paper contributes to the debate by proposing a general equilibrium theory of infectious disease transmission, prevention investment, and rational behavior. Diseases cause premature death, labor productivity loss and lower quality of life. Higher disease prevalence lowers the average saving-investment propensity. The model offers two insights. First, infectious disease can plausibly generate an unconventional growth trap where income alone cannot push an economy out of underdevelopment. Second, even when countries converge to the same balanced growth path, the disease ecology significantly impairs the pace of economic development.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 57 (2010)
Issue (Month): 7 (October)
Pages: 859-872

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Handle: RePEc:eee:moneco:v:57:y:2010:i:7:p:859-872
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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