We compare growth rates in the absence and presence of life insurance using an overlapping generations framework with human capital accumulation to clarify how life insurance contributes to economic growth through the education investment of individuals depending on economic circumstances.Our results show that, as expected, the growth rate is higher when there is life insurance if the rate of time preference or the productivity of human capital accumulation is sufficiently low and if the income loss induced from lifetime uncertainty is moderate. However, if the income loss is sufficiently large, the growth rate is lower when there is life insurance.
This paper, incorporating public goods into a two-country Diamond overlapping generations model, shows the existence of a transfer paradox. Governments supply public goods, in addition to imposing a tax on workers and issuing government bonds. In the short-run, only a weak paradox can occur, but in the long-run, both weak and strong paradoxes can occur. These paradoxical results depend on government policy concerning the level of supply of public goods, and on the difference in the levels of externality of public goods between the donor country and the recipient country. The transitional economy will also be discussed.Fiscal policy, foreign aid, public goods, macroeconomic analyses of economic development,
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.