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Endogenous lifetime, accidental bequests and economic growth

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  • Luciano Fanti
  • Luca Gori
  • Fabio Tramontana

Abstract

This paper introduces the concept of unintentional bequests in a closed economy à la Chakraborty (J Econ Theory 116:119–137, 2004 ) with overlapping generations. We show that scarce public investments in health can lead to poverty traps depending on the relative size of the output elasticity of capital. More importantly, the existence of unintentional bequests, rather than a market for annuities, means that health tax rates play a prominent role in determining the stability of the long-term equilibrium in rich economies. In fact, Neimark–Sacker bifurcations and endogenous fluctuations occur depending on the size of the public health system. Copyright Springer-Verlag Italia 2014

Suggested Citation

  • Luciano Fanti & Luca Gori & Fabio Tramontana, 2014. "Endogenous lifetime, accidental bequests and economic growth," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 37(1), pages 81-98, April.
  • Handle: RePEc:spr:decfin:v:37:y:2014:i:1:p:81-98
    DOI: 10.1007/s10203-012-0138-2
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    More about this item

    Keywords

    Accidental bequests; Endogenous lifetime; Health ; OLG model; C62; I18; J18; O4;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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