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Infectious Diseases and Economic Growth

Author

Listed:
  • Aditya Goenkay

    () (Department of Economics, National University of Singapore, AS2, Level 6, 1 Arts Link, Singapore 117570)

  • Lin Liu

    () (Department of Economics, Harkness Hall, University of Rochester, Rochester, NY 14627, USA)

  • Manh-Hung Nguyen

    () (LERNA-INRA, Toulouse School of Economics, Manufacture des Tabacs, 21 All¶ee de Brienne, 31000 Toulouse, France)

Abstract

This paper develops a framework to study the economic impact of infectious diseases by integrating epidemiological dynamics into a continuous time neo-classical growth model. There is a two way interaction between the economy and the disease: the incidence of the disease affects labor supply and investment in health capital can affect the incidence and recuperation from the disease. Thus, both the disease incidence and the income levels are endogenous. It is a general framework to study the effect and control of infectious diseases where there is an interaction with physical capital and health expenditures. The dynamics of the disease make the control problem non-convex and thus, a new existence theorem is given. We fully characterize the local dynamics of the model. There can be multiple steady states, and as the underlying parameters change there can be bifurcations. There can also be steady states where the disease is endemic but the optimal response is not to spend any resources on controlling it. We also see how the endogenous variables change as some underlying economic parameters are varied.

Suggested Citation

  • Aditya Goenkay & Lin Liu & Manh-Hung Nguyen, 2013. "Infectious Diseases and Economic Growth," Working Papers 06, Development and Policies Research Center (DEPOCEN), Vietnam.
  • Handle: RePEc:dpc:wpaper:0613
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    References listed on IDEAS

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    Cited by:

    1. Théophile Azomahou & Bity Diene & Mbaye Diene & Luc Soete, 2015. "Optimal health investment and preference structure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 60(3), pages 521-565, November.
    2. Lin Liu & Aditya Goenka, 2017. "Infectious Diseases, Human Capital and Economic Growth," 2017 Meeting Papers 1218, Society for Economic Dynamics.
    3. Stefano Bosi & David Desmarchelier, 2016. "Pollution and infectious diseases," Working Papers 2016.22, FAERE - French Association of Environmental and Resource Economists.
    4. Goenka, Aditya & Liu, Lin & Nguyen, Manh-Hung, 2014. "Infectious diseases and economic growth," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 34-53.
    5. Aditya Goenka & Lin Liu, 2012. "Infectious diseases and endogenous fluctuations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 125-149, May.
    6. Chakraborty, Shankha & Papageorgiou, Chris & Sebastián, Fidel Pérez, 2016. "Health Cycles And Health Transitions," Macroeconomic Dynamics, Cambridge University Press, vol. 20(01), pages 189-213, January.
    7. David Aadland & David Finnoff & Kevin X. D. Huang, 2016. "Behavioral Origins of Epidemiological Bifurcations," Vanderbilt University Department of Economics Working Papers 16-00004, Vanderbilt University Department of Economics.

    More about this item

    Keywords

    Epidemiology; Infectious Disease; Bifurcation; Existence of equilibrium;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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