The Economic Impact of AIDS in Sub-Saharan Africa

Theophile Azomahou ()
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Theophile Azomahou: UNU-MERIT

No 2008-038, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: In this paper, a simple general equilibrium model à la Solow is developed to capture the impact of AIDS on economic growth. To this end, a benchmark model due to Cuddington and Hancock (1994) is extended in various directions. In particular, the sharply declining life expectancy patterns are clearly rejected in the enlarged model through a generic Ben-Porath mechanism. AIDS-related health expenditures are incorporated as well. Using up-do-date optimal forecasting methods, the model applied to South Africa shows that while a relatively short term assessment might not reveal any dramatic AIDS growth effect, the medium/long run impact can be truly devastating. In particular, the heavy trends in mortality and life expectancy currently induced by AIDS are shown to be potentially at least twice more detrimen-tal for per capita economic growth in the period 2020-2030 compared to 2000-2010.

Keywords: Epidemics; Life Expectancy; Economic Growth; AIDS (search for similar items in EconPapers)
JEL-codes: C61 C62 O41 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2008038

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