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    The golden rule of longevity

    Zoega, Gylfi and Gestsson, M. (2018) The golden rule of longevity. Macroeconomic Dynamics 23 (1), pp. 384-419. ISSN 1365-1005.

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    Abstract

    How much should society invest in medical care that extends the lives of the older generations? We derive a golden rule for the level of health care expenditures and find that the optimal level of life-extending health care expenditures should increase with rising productivity, increase with the retirement age, and also increase with the population growth rate if a higher growth rate lowers the ratio of retirees to working-age people sufficiently, while the effects of an improvement in medical technology are ambiguous. Moreover, we find that a market economy may be inefficient in terms of the provision of life-extending health care because an individual ignores the effect of his own longevity on the income of others.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Health care expenditures, golden rule, productivity
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Gylfi Zoega
    Date Deposited: 11 Apr 2018 13:30
    Last Modified: 14 Feb 2021 13:00
    URI: https://eprints.bbk.ac.uk/id/eprint/21912

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