Fanti, Luciano and Gori, Luca (2010): Public expenditure on health and private old-age insurance in an OLG growth model with endogenous fertility: chaotic cycles under perfect foresight.
Download (163kB) | Preview
This paper analyses the dynamics of a simple overlapping generations economy with endogenous longevity, endogenous fertility and private transfers from children to parents. In this context, it is shown that both the public provision of health care services, which determines the individual length of life, and the size of the intra-family transfer may be a source of chaotic cycles when individuals are perfect foresighted. However, such economic factors also have the potential to ultimately suppress undesirable chaotic fluctuations. This suggests that the equilibrium dynamics of an OLG growth model may endogenously reconcile the existence of both irregular business cycles and the global stability of the economic system.
|Item Type:||MPRA Paper|
|Original Title:||Public expenditure on health and private old-age insurance in an OLG growth model with endogenous fertility: chaotic cycles under perfect foresight|
|English Title:||Public expenditure on health and private old-age insurance in an OLG growth model with endogenous fertility: chaotic cycles under perfect foresight|
|Keywords:||Endogenous fertility; OLG model; Perfect foresight; Private old-age support; Public health care services|
|Subjects:||J - Labor and Demographic Economics > J1 - Demographic Economics > J14 - Economics of the Elderly ; Economics of the Handicapped ; Non-Labor Market Discrimination
H - Public Economics > H5 - National Government Expenditures and Related Policies > H55 - Social Security and Public Pensions
I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health
J - Labor and Demographic Economics > J1 - Demographic Economics > J18 - Public Policy
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium
|Depositing User:||Luca Gori|
|Date Deposited:||08. Jul 2010 19:31|
|Last Modified:||23. Mar 2015 20:05|
Azariadis, C., Drazen, A., 1993. Endogenous fertility in models of growth. Revista de Analisis Economico 8, 131–144.
Becker, G.S., Murphy, K.M., Tamura, R.F., 1990. Human capital, fertility, and economic growth. Journal of Political Economy 98, S12–S37.
Benhabib, J., Farmer, R., 1994, Indeterminacy and increasing returns, Journal of Economic Theory 63, 19–41.
Benhabib, J., Wen, Y., 2004. Indeterminacy, aggregate demand, and the real business cycle. Journal of Monetary Economics 51, 503–530.
Bental, B., 1989. The old age security hypothesis and optimal population growth. Journal of Population Economics 1, 285–301.
Bhattacharya, J., Qiao, X., 2007. Public and private expenditures on health in a growth model. Journal of Economic Dynamics and Control 31, 2519–2535.
Bier, M., Bountis, T.C., 1984. Remerging Feigenbaum trees in dynamical systems. Physics Letters A 104, 239–244.
Blackburn, K., Cipriani, G.P., 2002. A model of longevity, fertility and growth. Journal of Economic Dynamics and Control 26, 187–204.
Blackburn, K., Issa, H., 2002. Endogenous life expectancy in a simple model of growth. Centre for Growth and Business Cycle Research, School of Economic Studies, University of Manchester, Working Paper no. 13, available at http://www.ses.man.ac.uk/cgbcr/discussi.htm.
Cazzavillan, G, Lloyd-Braga, T, Pintus, P., 1998. Multiple steady states and endogenous fluctuations with increasing returns to scale in production. Journal of Economic Theory 80, 60–107.
Cazzavillan, G., 2001. Indeterminacy and endogenous fluctuations with arbitrarily small externalities. Journal of Economic Theory 101, 133–157.
Chakrabarti, R., 1999. Endogenous fertility and growth in a model with old age support. Economic Theory 13, 393–416.
Chakraborty, S., 2004. Endogenous lifetime and economic growth. Journal of Economic Theory 116, 119–137.
de la Croix, D., and Michel, P., 2002. A Theory of Economic Growth. Dynamics and Policy in Overlapping Generations. Cambridge University Press, Cambridge.
de la Croix, D., Ponthiere, G., 2009. On the Golden Rule of capital accumulation under endogenous longevity. Mathematical Social Sciences, forthcoming, doi:10.1016/j.mathsocsci.2009.07.007.
Diamond, P.A., 1965. National debt in a neoclassical growth model. American Economic Review 55, 1126–1150.
Eckstein, Z., Wolpin, K.I., 1985. Endogenous fertility and optimal population size. Journal of Public Economics 27, 93–106.
Ehrlich, I., Lui, F.T., 1991. Intergenerational Trade, Longevity, and Economic Growth. Journal of Political Economy 99, 1029–1059.
Galor, O., Weil, D.N., 1996. The gender gap, fertility, and growth. American Economic Review 86, 374–387.
Grandmont, J.M., Pintus, P, de Vilder, R., 1998. Capital-labor substitution and competitive nonlinear endogenous business cycles. Journal of Economic Theory 80, 14–59.
Fanti, L., Gori, L., 2009. Endogenous fertility, endogenous lifetime and economic growth: the role of health and child policies. Discussion Paper no. 91, October, Department of Economics, University of Pisa, available at http://www.dse.ec.unipi.it/pubblicazioni/dsedps/files/2009-91.pdf.
Fanti, L., Gori, L., 2010. Economic growth and stability with public PAYG pensions and private intra-family old-age insurance. MPRA Working Paper no. 20727, February, available at http://mpra.ub.uni-muenchen.de/20727/.
Fioroni, T., 2009. Optimal savings and health spending over the life cycle. European Journal of Health Economics, forthcoming, doi:10.1007/s10198-009-0183-0.
Groezen, B. van, Meijdam, L., 2008. Growing old and staying young: population policy in an ageing closed economy. Journal of Population Economics 21, 573–588.
Groezen, B. van, Leers, T., Meijdam, L., 2003. Social security and endogenous fertility: pensions and child allowances as Siamese twins. Journal of Public Economics 87, 233–251.
Kydland, F.E. Prescott, E.C., 1982. Time to Build and Aggregate Fluctuations. Econometrica 50, 1345–1370.
Leung, M.C.M., Wang, Y., 2010. Endogenous health care, life expectancy and economic growth. Pacific Economic Review 15, 11–31.
Martikainen, P., Valkonen, T., Moustgaard, H., 2009. The effect of individual taxable income, household taxable income and household disposable income on mortality in Finland, 1998-2004. Population Studies, 2 147–162.
Morand, O., 1999. Endogenous fertility, income distribution and growth. Journal of Economic Growth 4, 331–349.
Nishimura, K., Zhang, J., 1993. The old age security hypothesis revisited. Journal of Development Economics 41, 191–202.
Raut, L.K., Srinivasan, T.N., 1994. Dynamics of endogenous growth. Economic Theory 4, 770–790.
Reichlin, P., 1986. Equilibrium cycles in an overlapping generations economy with production. Journal of Economic Theory 40, 89–102.
Stone, L., 1993. Period-doubling reversals and chaos in simple ecological models. Nature 365, 617–620.
Wigger, B.U., 1999. Pay-as-you-go financed public pensions in a model of endogenous growth and fertility. Journal of Population Economics 12, 625–640.
World Bank 2008.
Žamac, J., 2007. Pension design when fertility fluctuates: The role of education and capital mobility. Journal of Public Economics 91, 619–639.
Zhang, J., Zhang, J., 1995. The effects of social security on population and output growth. Southern Economic Journal 62, 440–450.