Optimal Public Policy with Endogenous Mortality

Rangan Gupta and Emmanuel Ziramba

No 200829, Working Papers from University of Pretoria, Department of Economics

Abstract: Using a monetary pure-exchange overlapping generations model, where the probability of survival of the young agents depends upon share of government expenditure on health, education and infrastructure, we analyze the welfare-maximizing policy mix between explicit and implicit taxation. We show that increases in the survival probability lead to an increase in the reliance on seigniorage as a welfare maximizing outcome. However, for our results to hold, the seigniorage tax base must be large enough for the benevolent planner to use the inflation tax.

Keywords: Monetary Pure Exchange Overlapping Generations Model; Probability of Survival; Welfare Maximizing Policy Mix (search for similar items in EconPapers)
JEL-codes: H2 H51 I1 I18 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2008-08
New Economics Papers: this item is included in nep-dge, nep-hea and nep-pbe
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Journal Article: Optimal public policy with endogenous mortality (2010)
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