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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. David E. Bloom & David Canning & Günther Fink, 2014. "Disease and Development Revisited," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1355 - 1366.
  2. Askenazy, P. & Le Van, C., 1997. "A Model of Optimal Growth Strategy," DELTA Working Papers 97-27, DELTA (Ecole normale supérieure).
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  5. Aditya Goenkay & Lin Liu & Manh-Hung Nguyen, 2013. "Infectious Diseases and Economic Growth," Working Papers 06, Development and Policies Research Center (DEPOCEN), Vietnam.
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  19. 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.
  20. repec:hal:journl:halshs-00101140 is not listed on IDEAS
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  22. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, 01.
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  26. repec:gdm:wpaper:4409 is not listed on IDEAS
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