Public capital, health persistence and poverty traps

Pierre-Richard Agénor

Journal of Economics, 2015, vol. 115, issue 2, 103-131

Abstract: Growth dynamics and health outcomes are studied in a three-period overlapping generations model with public capital. Agents face a non-zero probability of death in adulthood. Parental health affects the health status of their children at birth, and health status in adulthood depends on health in childhood. An autonomous increase in life expectancy has an ambiguous impact on growth, because of an adverse effect on the public–private capital ratio. If life expectancy depends endogenously on health status, multiple equilibria may emerge. A reallocation of public spending toward either health or infrastructure may put the economy on a convergent path to a high-growth, high productivity steady state. However, escaping from a health-induced poverty trap can occur only if the quality of public spending is sufficiently high. Copyright Springer-Verlag Wien 2015

Keywords: Public capital; Health persistence; Life expectancy; OLG models; Multiple equilibria; Poverty traps; O41; H54; I18 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (12)

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Working Paper: Public Capital, Health Persistence and Poverty Traps (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:115:y:2015:i:2:p:103-131

DOI: 10.1007/s00712-014-0418-0

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