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Consumption and Investment Demand when Health Evolves Stochastically

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Title: Consumption and Investment Demand when Health Evolves Stochastically
Authors: Bolin, Kristian
Caputo, Michael R.
Issue Date: Oct-2017
Extent: 24
Publication type: report
Organization: Dept. of Economics, University of Gothenburg
Series/Report no.: Working Papers in Economics
Keywords: comparative dynamics
health capital
stochastic optimal control
structural equations
Abstract: The health capital model of Grossman (1972) is extended to account for uncertainty in the rate at which a stock of health depreciates. Two versions of the model are contemplated, one with a fully functioning financial market and the other in its absence. The comparative dynamics of the consumption and health-investment demand functions are studied in both models in a general setting, where it is shown that the key to deriving refutable results is to determine how a parameter or state variable af... more
ISSN: 1403-2465
Description: JEL: C61; D11; I12
Appears in Collections:Working papers



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