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Public health spending, old-age productivity and economic growth: chaotic cycles under perfect foresight

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  • Fanti, Luciano
  • Gori, Luca

Abstract

This paper analyses the dynamics of a double Cobb-Douglas economy with overlapping generations and public health investments that affect the supply of efficient labour of the old-aged. It is shown that the positive steady state of the economy is unique. Moreover, we provide necessary and sufficient conditions for the emergence of endogenous deterministic complex cycles when individuals are perfect foresighted. Interestingly, the equilibrium dynamics shows rather complicated phenomena such as a multiplicity of period-bubbling.

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  • Fanti, Luciano & Gori, Luca, 2010. "Public health spending, old-age productivity and economic growth: chaotic cycles under perfect foresight," MPRA Paper 21335, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21335
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    Cited by:

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    2. Fu, Min & Gu, Liqin & Zhen, Zaili & Sun, Mei & Tian, Lixin, 2020. "Optimal carbon tax income distribution and health welfare spillover effect based on health factors," Applied Energy, Elsevier, vol. 276(C).
    3. Paolo Melindi-Ghidi & Willem Sas, 2015. "Invest as You Go: How Public Health Investment Keeps Pension Systems Healthy," AMSE Working Papers 1525, Aix-Marseille School of Economics, France.
    4. Kontogiannis, Nikolaos & Litina, Anastasia & Varvarigos, Dimitrios, 2019. "Occupation-induced status, social norms, and economic growth," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 348-360.
    5. Raffin, Natacha & Seegmuller, Thomas, 2014. "Longevity, pollution and growth," Mathematical Social Sciences, Elsevier, vol. 69(C), pages 22-33.
    6. Xiao, Bowen & Fan, Ying & Guo, Xiaodan & Xiang, Lin, 2022. "Re-evaluating environmental tax: An intergenerational perspective on health, education and retirement," Energy Economics, Elsevier, vol. 110(C).
    7. Cao Dong & Wang Lin & Wang Shouyang, 2017. "Fold Bifurcation Caused by Pollution Emission in an OLG Economy," Journal of Systems Science and Information, De Gruyter, vol. 5(4), pages 302-309, August.
    8. Dimitrios Varvarigos, 2013. "Endogenous Cycles and Human Capital," Discussion Papers in Economics 13/18, Division of Economics, School of Business, University of Leicester.
    9. Luca Gori & Mauro Sodini, 2011. "Nonlinear Dynamics in an OLG Growth Model with Young and Old Age Labour Supply: The Role of Public Health Expenditure," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 261-275, October.
    10. Cavalli, F. & Chen, H.-J. & Li, M.-C. & Naimzada, A. & Pecora, N., 2023. "Heterogeneous expectations and equilibria selection in an evolutionary overlapping generations model," Journal of Mathematical Economics, Elsevier, vol. 104(C).
    11. repec:hal:wpaper:hal-00930936 is not listed on IDEAS
    12. Makoto Hirono, 2020. "Transitional dynamics of the R&D growth model with public education," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 662-675, November.
    13. Giorgio Fabbri & Marie-Louise Leroux & Paolo Melindi-Ghidi & Willem Sas, 2022. "Conditioning public pensions on health: effects on capital accumulation and welfare," Working Papers 2022-05, Grenoble Applied Economics Laboratory (GAEL).
    14. Wei-Bin Zhang, 2014. "Endogenous population with human and physical capital accumulation," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(3), pages 231-252, September.
    15. Luca Marchiori & Olivier Pierrard, 2023. "Health subsidies, prevention and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(6), pages 1304-1336, December.
    16. Wei-Bin, ZHANG, 2015. "Economic Oscillations With Endogenous Population, Human Capital And Wealth," Annals of Spiru Haret University, Economic Series, Universitatea Spiru Haret, vol. 6(2), pages 9-26.

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    More about this item

    Keywords

    OLG model; Productivity; Perfect foresight; Public health expenditure;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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