Optimal Social Insurance and Health Inequality
In: CEGE Number 302 – February 2017
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In: CEGE Number 302 – February 2017
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Working paper
Although death occurs with certainty, the time of death is uncertain. In this paper we build on this conceptualization and show that, although life ends at some point in time, human life can be meaningfully conceptualized as a strive for immortality that is never reached. We consider an intertemporal problem where health investments and consumption choices are made, taking into account that mortality depends on environmental factors, which are not controlled by the agent, and the agent's health condition, which is endogenous to lifestyle and health behavior. Formally, the infinite horizon approach has the advantage that adjustment dynamics to the steady state (i.e. human aging) can be discussed analytically. We explore the determinants of health deficits in this framework and show how individuals choose consumption and health expenditure over their lifetime in order to slow down (biological) aging. We compute analytically the impulse response functions for unexpected parameter changes. Specifically, we investigate how higher prices for medical goods and advancing medical technology affect individual behavior and health deficit accumulation.
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In: CESifo Working Paper Series No. 5604
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In: CESifo Working Paper Series No. 5619
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In: CESifo Working Paper Series No. 5638
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In: Journal of development economics, Band 109, S. 17-29
ISSN: 0304-3878
In: Journal of development economics, Band 109, S. 17-29
ISSN: 0304-3878
World Affairs Online
In: Revised Version, CEGE Discussion Paper
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In: cege Discussion Paper Number 205 – April 2014
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In: Discussion Papers on Business and Economics, University of Southern Denmark, 11/2014
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In: cege Discussion Papers No. 216
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In: Journal of population economics: international research on the economics of population, household, and human resources, Band 28, Heft 1, S. 31-44
ISSN: 1432-1475
Most of the discussion about fiscal stimulus focuses on the multiplier of government spending on impact. In this paper we shift the focus to the multiplier at the end, i.e. to the period in which a deficit spending program terminates. We show that recent time series analyses as well as economic models of different schools of thought predict that the multiplier turns negative before spending expires. This means that aggregate output at the time of expiry of fiscal stimulus is predicted to be lower than it could be without deficit spending. We set up a simple model that explains this phenomenon. Using phase diagram analysis we prove that the aggregate capital stock at the time of expiry of fiscal stimulus is lower than it would be without the deficit spending program. This fact explains why aggregate output is below its laissez faire level as well. We then calibrate an extended version of the model for the US and demonstrate how fiscal stimulus slows down recovery from a recession in the medium-run.
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