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Optimal health investment with separable and non-separable preferences

Theophile Azomahou (), Luc Soete, Bity Diene and Mbaye Diene
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Theophile Azomahou: UNU-MERIT/MGSoG, Maastricht University
Bity Diene: University of Auvergne, CERDI
Mbaye Diene: University Cheikh-Anta-Diop, CRES

No 2012-047, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: We use a general equilibrium framework to study optimal health investment in a dynamic model where agents derive utility from consumption and health. The steady state and the dynamics of the model are studied under separable and non-separable preferences. A shock undermining health which increases health expenditure and weakens the income base, not only affects savings but also compromises the consumption capacity. The magnitude of the effects strongly depends on the preferences. The dynamics of the model includes the equilibrium dynamics and bifurcations. Simulation experiments lend additional supports to our findings in favor of the non-separable preferences.

Keywords: network formation; strategic alliances; innovation; network strategy; interfirm networks (search for similar items in EconPapers)
JEL-codes: D85 L14 L20 O30 (search for similar items in EconPapers)
Date: 2012
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