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Endogenous Lifetime and Economic Growth Revisited

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  • Bunzel, Helle
  • Qiao, Xue

Abstract

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.

Suggested Citation

  • Bunzel, Helle & Qiao, Xue, 2004. "Endogenous Lifetime and Economic Growth Revisited," ISU General Staff Papers 200401010800001087, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:200401010800001087
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    References listed on IDEAS

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    1. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    2. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
    3. repec:rus:hseeco:71105 is not listed on IDEAS
    4. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1203-1250.
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    Cited by:

    1. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    2. Agénor, Pierre-Richard, 2010. "A theory of infrastructure-led development," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 932-950, May.
    3. Gong, Liutang & Li, Hongyi & Wang, Dihai, 2012. "Health investment, physical capital accumulation, and economic growth," China Economic Review, Elsevier, vol. 23(4), pages 1104-1119.
    4. Ahmad Naimzada & Giorgio Ricchiuti, 2006. "The Non-monotonic Relationship between Taxation and Long Term Equilibrium in a Model of Endogenous Lifetime and Economic Growth," Working Papers 105, University of Milano-Bicocca, Department of Economics, revised 2006.
    5. Luciano Fanti & Luca Gori & Fabio Tramontana, 2014. "Endogenous lifetime, accidental bequests and economic growth," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 37(1), pages 81-98, April.
    6. Rangan Gupta & Cobus Vermeulen, 2010. "Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 139-153, May.
    7. Liutang Gong & Hongyi Li & Dihai Wang & Heng-fu Zou, 2010. "Health, Taxes, and Growth," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 73-94, May.
    8. Dihai Wang & Heng-fu Zou, 2011. "The Fogel Approach to Health and Growth," CEMA Working Papers 520, China Economics and Management Academy, Central University of Finance and Economics.
    9. Junying Zhao & William Scarth & Jeremiah Hurley, 2018. "Investing in Health: A Macroeconomic Exploration of Short-Run and Long-Run Trade-Offs," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(1), pages 121-133, March.
    10. Dimitrios Varvarigos, 2010. "Environmental Degradation, Longevity, and the Dynamics of Economic Development," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(1), pages 59-73, May.
    11. Yamauchi, Futoshi, 2007. "Marriage, schooling, and excess mortality in prime-age adults: Evidence from South Africa," IFPRI discussion papers 691, International Food Policy Research Institute (IFPRI).
    12. Pierre-Richard Agénor, 2006. "A Theory of Infrastructure-led Development," Economics Discussion Paper Series 0640, Economics, The University of Manchester.
    13. Fanti, Luciano & Gori, Luca, 2010. "Endogenous fertility and development traps with endogenous lifetime," MPRA Paper 26147, University Library of Munich, Germany.

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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