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On the Golden Rule of capital accumulation under endogenous longevity

  • David, DE LA CROIX

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

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, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008032.

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Date of creation: 01 Dec 2008
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Handle: RePEc:ctl:louvec:2008032
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  1. DE LA CROIX, David & LICANDRO, Omar, 2007. "‘The child is father of the man’: implications for the demographic transition," CORE Discussion Papers 2007072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. BOUCEKKINE, Raouf & DIENE, Bity & AZOMAHOU, Théophile, . "Growth economics of epidemics: A review of the theory," CORE Discussion Papers RP 2004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
  4. Mausumi Das & Shankha Chakraborty, 2010. "Mortality, Human Capital and Persistent Inequality," Working Papers id:2365, eSocialSciences.
  5. Charles I. Jones, . "Was an Industrial Revolution Inevitable? Economic Growth Over the Very Long Run," Working Papers 99008, Stanford University, Department of Economics.
  6. 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.
  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. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
  9. Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
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