 Existence and stability of overconsumption equilibriaPSE-Ecole d'économie de Paris (Postprint) from HAL Abstract: Growth models with endogenous mortality assume generally that life expectancy is increasing with output per capita and, thus, with individual consumption, whatever its level is. However, empirical evidence supports a U-shaped relationship between consumption and mortality, implying that the monotonicity of that relation is local but not global. This paper develops a two-period OLG model where life expectancy is a non-monotone function of consumption, and where agents form myopic anticipations about life expectancy. The existence, uniqueness and stability of steady-state equilibria are studied. It is shown that overconsumption equilibria -- i.e. equilibria at which consumption exceeds the level maximizing life expectancy -- exist in highly productive economies with a low impatience. We identify also conditions under which there exist long-run cycles in output and longevity around overconsumption equilibria. Keywords: Longevity; Mortality; Growth; Overconsumption; OLG model (search for similar items in EconPapers) Published in Economic Modelling, 2011, 28 (1-2), pp.74-90. ⟨10.1016/j.econmod.2010.09.022⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00754548 DOI: 10.1016/j.econmod.2010.09.022 Access Statistics for this paper More papers in PSE-Ecole d'économie de Paris (Postprint) from HAL |
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