On the Golden Rule of capital accumulation under endogenous longevity
(2010) Mathematical Social Sciences — Vol. 59, n° 2, p. 227-238 (2010)
Files
pdfdocument.pdf
Restricted Access - Adobe PDF
- 576.16 KB
Details
- Authors
- Abstract
- Health spending obviously increase with capital per worker. This paper derives the optimal accumulation policy in such a context. The optimal accumulation rule depends on whether health spending improve consumption enjoyment, and on whether the planner adheres to an instantaneous welfarist view or to a complete life view. First, when the only role of health is to enhance longevity, we show that the capital per worker maximizing steady-state consumption per head is inferior to the standard Golden Rule. Moreover, the capital per worker maximizing steady-state consumption per head, when consumption efficiency depends on the health status, tends to exceed the optimal capital level under purely longevity-enhancing spending. Finally, when the planner adheres to a complete life view, the capital per worker maximizing steady-state expected lifetime consumption per head exceeds the optimal capital per worker under the instantaneous view. (C) 2009 Elsevier B.V. All rights reserved.
- Affiliations
Citations
De la Croix, D., & Ponthiere, G. (2010). On the Golden Rule of capital accumulation under endogenous longevity. Mathematical Social Sciences, 59(2), 227-238. https://doi.org/10.1016/j.mathsocsci.2009.07.007 (Original work published 2010)