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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. Robert E Hall & Charles I Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 39-72, 02.
  2. Omar Licandro & David de la Croix, 2008. "The Child is Father of the Man: Implications for the Demographic Transition," 2008 Meeting Papers 186, Society for Economic Dynamics.
  3. Shankha Chakraborty & Mausumi Das, 2004. "Mortality, Human Capital and Persistent Inequality," Econometric Society 2004 North American Summer Meetings 100, Econometric Society.
  4. Robert Tamura, 2002. "Human capital and economic development," Working Paper 2002-5, Federal Reserve Bank of Atlanta.
  5. Cervellati, Matteo & Sunde, Uwe, 2005. "Human capital formation, life expectancy, and the process of development," Munich Reprints in Economics 20083, University of Munich, Department of Economics.
  6. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
  7. 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.
  8. Kevin M. Murphy & Robert H. Topel, 2005. "The Value of Health and Longevity," NBER Working Papers 11405, National Bureau of Economic Research, Inc.
  9. 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.
  10. repec:cup:cbooks:9780521001151 is not listed on IDEAS
  11. repec:cup:cbooks:9780521017039 is not listed on IDEAS
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