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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: OLG model; Productivity; Perfect foresight; Public health expenditure
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium

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