On the Golden Rule of capital accumulation under endogenous longevity

This note derives the Golden Rule of capital accumulation in a Chakrabortytype economy, i.e. a two-period OLG economy where longevity is endogenous. It is shown that the capital per worker maximizing steady-state consumption per head is inferior to the Golden Rule capital level prevailing under exogenous longevity as soon as health spending increase with capital per worker. We characterize also the Lifetime Golden Rule, that is, the capital per worker maximizing steady-state expected lifetime consumption per head, and show that this tends to exceed the Golden Rule capital level. JEL codes: E13, E21, E22, I12.

• Type: Journal
• Year: 2010
• Where: MSS
• Authors: David de la Croix, Gregory Ponthiere
• Keywords: Golden Rule, Golden Rule Capital, Hardware, MSS 2010, Rule Capital Level