Endogenous lifetime and economic growth: the roleof the tax rate

Laurent Brembilla ()
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Laurent Brembilla: PSL, Université Paris-Dauphine, LEDa

Economic Theory Bulletin, 2016, vol. 4, issue 2, No 9, 247-263

Abstract: Abstract This paper revisits the health-economic growth nexus from the seminal contribution of Chakraborty (J Econ Theory 116(1):119–137, 2004). In his two periods overlapping generations model with a lifetime depending on public health expenditures, I study the influence of the tax rate on the economy. This enables me to determine in which cases the health policy can spur economic growth. I present three results: (i) In the endogenous growth case, the health policy can eradicate some poverty traps. (ii) The growth-maximizing tax rate is 0 in low-income countries. (iii) The steady state income level is an inverted U-shaped function or a decreasing function of the tax rate.

Keywords: Endogenous longevity; Economic growth; Health and economic development; Overlapping generations (search for similar items in EconPapers)
JEL-codes: C62 I15 O30 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s40505-015-0084-6

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