de la Croix, David
[UCL]
Ponthiere, Gregory
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.
Bibliographic reference |
de la Croix, David ; Ponthiere, Gregory. On the Golden Rule of capital accumulation under endogenous longevity. In: Mathematical Social Sciences, Vol. 59, no. 2, p. 227-238 (2010) |
Permanent URL |
http://hdl.handle.net/2078.1/34742 |