This paper introduces unfunded pay-as-you-go public pensions in a two-period overlapping generations model with endogenous lifetime à la Chakraborty (2004). We study the transitional dynamics and steady states outcomes 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 economies. Moreover, under myopic expectations, the government health expenditure can generate non-monotonic fluctuations in low mortality societies.

Public health spending and unfunded public pensions in an OLG model of neoclassical growth: some new results about the poverty trap problem

Luciano Fanti;Luca Gori
2011

Abstract

This paper introduces unfunded pay-as-you-go public pensions in a two-period overlapping generations model with endogenous lifetime à la Chakraborty (2004). We study the transitional dynamics and steady states outcomes 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 economies. Moreover, under myopic expectations, the government health expenditure can generate non-monotonic fluctuations in low mortality societies.
Fanti, Luciano; Gori, Luca
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11568/930696
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