ENDOGENOUS LIFE EXPECTANCY IN A SIMPLE MODEL OF GROWTH

Keith Blackburn (University of Manchester)
Haitham Issa (University of Manchester)

In an overlapping generations economy reproductive agents mature safely through two periods and face an endogenous probability of surviving for a third period. Given this probability, which depends on aggregate outcomes, each agent maximises her expected lifetime utility by choosing consumption and savings. The dynamic general equilibrium of the economy is characterised by multiple development regimes associated with different levels of economic activity and different rates of life expectancy. Transition between these regimes may or may not occur depending on parameter values and initial conditions.