Endogenous Lifetime and Economic Growth Revisited
Chakraborty [Journal of Economic Theory, 2004] introduces endogenous mortality in a two period overlapping generations model by postulating that the probability of surviving from the first period to the second depends on tax-funded public health. His central result on the existence of multiple steady states (including development traps) summarized in Proposition 1 is incorrect. This paper presents the correct proposition and its proof, and in the process, uncovers several new, interesting results. Contrary to Chakraborty's analysis, high mortality yet high capital nations may not be able to escape the poverty trap. Interestingly, TFP growth can help economies escape the vicious cycle of poverty.
|Date of creation:||11 Oct 2004|
|Date of revision:|
|Publication status:||Published in Economics Bulletin, October 2004, vol. 15, pp. 1-8|
|Contact details of provider:|| Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070|
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Department of Economics - Working Papers Series
913, The University of Melbourne.
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