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On the Golden Rule of capital accumulation under endogenous longevity

  • DE LA CROIX, David

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • PONTHIÈRE, Grégory

This note derives the Golden Rule of capital accumulation in a Chakraborty-type economy, i.e. a two-period OLG economy where longevity is endogenous. It is shown that the capital per worker maximizing steady-state consumption per head is inferior to the Golden Rule capital level prevailing under exogenous longevity. We characterize also the Lifetime Golden Rule, that is, the capital per worker maximizing steady-state expected lifetime consumption per head, and show that this tends to exceed the standard Golden Rule capital level.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2008049.

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Date of creation: 01 Aug 2008
Date of revision:
Handle: RePEc:cor:louvco:2008049
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  1. Shankha Chakraborty & Mausumi Das, 2003. "Mortality, Human Capital and Persistent Inequality," University of Oregon Economics Department Working Papers 2003-11, University of Oregon Economics Department.
  2. Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December.
  3. repec:tpr:qjecon:v:122:y:2007:i:1:p:39-72 is not listed on IDEAS
  4. Charles I. Jones, 1999. "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," NBER Working Papers 7375, National Bureau of Economic Research, Inc.
  5. Raouf Boucekkine & Bity Diene & Theophile Azomahou, 2008. "Growth Economics of Epidemics: A Review of the Theory," Mathematical Population Studies, Taylor & Francis Journals, vol. 15(1), pages 1-26.
  6. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
  7. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
  8. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
  9. David de la Croix & Omar Licandro, 2007. "‘The Child is Father of the Man:’ Implications for the Demographic Transition," Economics Working Papers ECO2007/05, European University Institute.
  10. Robert E. Hall & Charles I. Jones, 2004. "The Value of Life and the Rise in Health Spending," NBER Working Papers 10737, National Bureau of Economic Research, Inc.
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