Indeterminacy, intergenerational redistribution, endogenous longevity and human capital accumulation
This paper sets up an OLG economy with endogenous life expectancy to study how fiscal policy that redistributes between generations can open the door to sunspot equilibria. Agents invest independently in their own human capital, produce and consume output, and receive a pension upon retirement. The model produces an expectations coordination problem that can explain significant differences in growth paths followed by otherwise identical countries. In particular, we show that our economy may be characterised by local indeterminacy of dynamic equilibria, and hence feature fluctuations which are driven by extrinsic uncertainty.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (01392) 263218
Fax: (01392) 263242
Web page: http://business-school.exeter.ac.uk/about/departments/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Schmitt-Grohe, Stephanie & Uribe, Martin, 1997.
"Balanced-Budget Rules, Distortionary Taxes, and Aggregate Instability,"
Journal of Political Economy,
University of Chicago Press, vol. 105(5), pages 976-1000, October.
- Stephanie Schmitt-Grohe & Martin Uribe, 1995. "Balanced-budget rules, distortionary taxes, and aggregate instability," Finance and Economics Discussion Series 95-44, Board of Governors of the Federal Reserve System (U.S.).
- Bond, Eric W. & Wang, Ping & Yip, Chong K., 1996.
"A General Two-Sector Model of Endogenous Growth with Human and Physical Capital: Balanced Growth and Transitional Dynamics,"
Journal of Economic Theory,
Elsevier, vol. 68(1), pages 149-173, January.
- Eric W. Bond & Ping Wang & Chong K. Yip, 1993. "A general two-sector model of endogenous growth with human and physical capital: balanced growth and transitional dynamics," Research Paper 9324, Federal Reserve Bank of Dallas.
- Benhabib, Jess & Gali, Jordi, 1995.
"On growth and indeterminacy: some theory and evidence,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 43(1), pages 163-211, December.
- Benhabib, Jess & Gali, Jordi, 1995. "On Growth and Indeterminacy: Some Theory and Evidence," Working Papers 95-08, C.V. Starr Center for Applied Economics, New York University.
- 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.
- 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.
- Gary S. Becker & Kevin M. Murphy & Robert Tamura, .
"Human Capital, Fertility, and Economic Growth,"
University of Chicago - Population Research Center
90-5a, Chicago - Population Research Center.
- Gary S. Becker & Kevin M. Murphy & Robert Tamura, 1994. "Human Capital, Fertility, and Economic Growth," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 323-350 National Bureau of Economic Research, Inc.
- Becker, Gary S & Murphy, Kevin M & Tamura, Robert, 1990. "Human Capital, Fertility, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S12-37, October.
- Park, Hyun & Philippopoulos, Apostolis, 2004. "Indeterminacy and fiscal policies in a growing economy," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 645-660, January.
- Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
- Benhabib, Jess & Farmer, Roger E.A., 1999. "Indeterminacy and sunspots in macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 6, pages 387-448 Elsevier.
- Nordblom, Katarina, 2003. "Is increased public schooling really a policy for equality?: The role of within-the-family education," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1943-1965, September.
- Alonso-Carrera, Jaime & Freire-Seren, Maria Jesus, 2004.
"Multiple equilibria, fiscal policy, and human capital accumulation,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 28(4), pages 841-856, January.
- Jaime Alonso-Carrera & María Jesús Freire-Serén, 2002. "Multiple equilibria, fiscal policy, and human capital accumulation," Working Papers 0204, Universidade de Vigo, Departamento de Economía Aplicada.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-59, October.
- Jang-Ting Guo & Kevin J. Lansing, 1997.
"Indeterminacy and stabilization policy,"
9708, Federal Reserve Bank of Cleveland.
- Cipriani, Giam Pietro & Makris, Miltiadis, 2006. "A model with self-fulfilling prophecies of longevity," Economics Letters, Elsevier, vol. 91(1), pages 122-126, April.
- Robert Tamura, 2004.
"Human capital and economic development,"
2004-34, Federal Reserve Bank of Atlanta.
- Cazzavillan, Guido, 1996. "Public Spending, Endogenous Growth, and Endogenous Fluctuations," Journal of Economic Theory, Elsevier, vol. 71(2), pages 394-415, November.
- David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
When requesting a correction, please mention this item's handle: RePEc:exe:wpaper:0401. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlos Cortinhas)
If references are entirely missing, you can add them using this form.