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

Fanti, Luciano and Gori, Luca (2010): Public health spending, old-age productivity and economic growth: chaotic cycles under perfect foresight.

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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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