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Infectious Diseases and Economic Growth

  • Aditya Goenka
  • Lin Liu
  • Manh-Hung Nguyen

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.

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File URL: http://www2.toulouse.inra.fr/lerna/travaux/cahiers2011/11.04.338.pdf
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Paper provided by LERNA, University of Toulouse in its series LERNA Working Papers with number 11.04.338.

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Date of creation: Feb 2011
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Handle: RePEc:ler:wpaper:11.04.338
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  1. Goenka, Aditya & Liu, Lin & Nguyen, Manh-Hung, 2014. "Infectious diseases and economic growth," Journal of Mathematical Economics, Elsevier, vol. 50(C), pages 34-53.
  2. Cuong Le Van & Raouf Boucekkine & Cagri Saglam, 2007. "Optimal control in infinite horizon problems: a Sobolev spaces approach," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00101140, HAL.
  3. David Weil, 2006. "Accounting for the Effect of Health on Economic Growth," DEGIT Conference Papers c011_031, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Quamrul H. Ashraf & Ashley Lester & David N. Weil, 2009. "When Does Improving Health Raise GDP?," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 157-204 National Bureau of Economic Research, Inc.
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  6. Cuong Le Van & Yiannis Vailakis, 2003. "Existence of a competitive equilibrium in a one sector growth model with heterogeneous agents and irreversible investment," Economic Theory, Springer, vol. 22(4), pages 743-771, November.
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  8. Alwyn Young, 2005. "The Gift of the Dying: The Tragedy of Aids and the Welfare of Future African Generations," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 423-466, May.
  9. Daron Acemoglu & Simon Johnson, 2006. "Disease and Development: The Effect of Life Expectancy on Economic Growth," NBER Working Papers 12269, National Bureau of Economic Research, Inc.
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  14. Gersovitz, Mark & Hammer, Jeffrey S., 2001. "The economic control of infectious diseases," Policy Research Working Paper Series 2607, The World Bank.
  15. Hippolyte d'Albis & Pascal Gourdel & Cuong Le Van, 2004. "Existence of solutions in continuous-time optimal growth models," Cahiers de la Maison des Sciences Economiques b04063, Université Panthéon-Sorbonne (Paris 1).
  16. Philipson, Tomas, 2000. "Economic epidemiology and infectious diseases," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 33, pages 1761-1799 Elsevier.
  17. David E. Bloom & David Canning & Günther Fink, 2009. "Disease and Development Revisited," NBER Working Papers 15137, National Bureau of Economic Research, Inc.
  18. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 569-82, October.
  19. Robert E. Hall & Charles I. Jones, 2004. "The Value of Life and the Rise in Health Spending," NBER Working Papers 10737, National Bureau of Economic Research, Inc.
  20. Askenazy, Philippe & Le Van, 1997. "A model of optimal growth strategy," CEPREMAP Working Papers (Couverture Orange) 9707, CEPREMAP.
  21. Aditya Goenka & Lin Liu, 2012. "Infectious diseases and endogenous fluctuations," Economic Theory, Springer, vol. 50(1), pages 125-149, May.
  22. Chichilnisky, Graciela, 1981. "Existence and Characterization of Optimal Growth Paths Including Models with Non-Convexities in Utilities and Technologies," Review of Economic Studies, Wiley Blackwell, vol. 48(1), pages 51-61, January.
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  25. repec:cup:cbooks:9780521603683 is not listed on IDEAS
  26. repec:hal:journl:halshs-00101140 is not listed on IDEAS
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