Infectious diseases, human capital and economic growth

• DOI: 10.1007/s00199-019-01214-7
• Publication Date: 2019-07-04T14:35:29Z
• Authors: Aditya Goenka; Lin Liu
• Keywords: Poverty trap; Stylized fact; Externality; Endogenous growth theory; Dutch disease

Stylized facts show there is a clustering of countries in three balanced growth paths characterized by differing income/growth, human capital and incidence infectious diseases. To explain this, we develop dynamic general equilibrium model incorporating SIS epidemiology dynamics, where households choose how much to invest physical capital, as well controlling the risk infection. In decentralized economy, do not internalize externality There are multiple endogenous prevalence disease determines whether accumulated or not, i.e., sustained economic poverty trap. We characterize optimal public health policy that internalizes subsidy decentralizes it. Perversely, for trap most afflicted with diseases, lower than growing economies. also study quantitative effects better control increasing life expectancy on