Public Health Spending and Unfunded Public Pensions in an OLG Model of Neoclassical Growth: Some New Results About the Poverty Trap Problem

Luciano Fanti and Luca Gori ()

Rivista italiana degli economisti, 2011, issue 2, 319-338

Abstract: This paper introduces unfunded pay-as-you-go public pensions in a two-period overlapping generations economy with endogenous lifetime à la Chakraborty (2004). We study the transitional dynamics and steady states outcomes of the economy, showing that the public provision of health services may have not only the well-known beneficial effect to help to escape from poverty, but it can also produce unexpected negative consequences for per capita GDP in both low-income-high-mortality and high-income-low-mortality societies. Moreover, under myopic expectations, the government health expenditure can generate non-monotonic fluctuations in low mortality societies.

Keywords: health; OLG model; public pensions; C62; I18; J1; O4. (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mul:jqat1f:doi:10.1427/34975:y:2011:i:2:p:319-338

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