Public and Private Expenditures on Health in a Growth Model

Joydeep Bhattacharya () and Xue Qiao ()

Staff General Research Papers from Iowa State University, Department of Economics

Abstract: This paper introduces endogenous longevity in an otherwise standard overlapping generations model with capital. In the model, a young agent may increase the length of her old age by incurring investments in health funded from her wage income. Such private health investments are assumed to be more "productive" if accompanied by complementary tax-financed public health programs. The presence of such a complementary public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos, and such volatility is impossible in its absence. In particular, the model is capable of generating dramatic reversals in life expectancy as has been observed in many countries.

JEL-codes: E0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-mac
Date: 2005-06-28
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Published in Journal of Economic Dynamics and Control, August 2007, Vol. 31, No. 8, pp. 2519-2535.

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http://dx.doi.org/10.1016/j.jedc.2006.07.007

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Persistent link: http://EconPapers.repec.org/RePEc:isu:genres:12378

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