On the Golden Rule of capital accumulation under endogenous longevity

David de la Croix and Gregory Ponthiere

Mathematical Social Sciences, 2010, vol. 59, issue 2, 227-238

Abstract: Health spending obviously increase with capital per worker. This paper derives the optimal accumulation policy in such a context. The optimal accumulation rule depends on whether health spending improve consumption enjoyment, and on whether the planner adheres to an instantaneous welfarist view or to a complete life view. First, when the only role of health is to enhance longevity, we show that the capital per worker maximizing steady-state consumption per head is inferior to the standard Golden Rule. Moreover, the capital per worker maximizing steady-state consumption per head, when consumption efficiency depends on the health status, tends to exceed the optimal capital level under purely longevity-enhancing spending. Finally, when the planner adheres to a complete life view, the capital per worker maximizing steady-state expected lifetime consumption per head exceeds the optimal capital per worker under the instantaneous view.

Keywords: Golden; Rule; Health; Longevity; OLG; models (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

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Related works:
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2010)
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2010)
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2008)
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2008)
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2008)
Working Paper: On the Golden Rule of capital accumulation under endogenous longevity (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:59:y:2010:i:2:p:227-238

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