On the Beach? Sustainability, Optimal Pollution, and Optimal Population

Is it possible that the utility maximizing behavior leads the mankind to destruction? We develop a model with optimal pollution and optimal population in which population growth rate decreases along with pollution. We study if the optimal path is demographically sustainable, i.e. if it can provide non-decreasing consumption for a non-decreasing population. We find that demographic sustainability is impossible without technical progress. Technical progress, however, does not necessarily lead to demographically sustainable growth.

Population Growth and Multiple Equilibria: Inferences from a Modified Ramsey Model

The demographic transition is introduced into the otherwise standard Ramsey model to generate multiple equilibria, poverty traps, and demography-driven cycles. The model is calibrated for global data to explore the demographic conditions under which multiplicity is realized. Three cases arise, referring either to unique or multiple equilibria, and to transitional cycles. The calibrated model shows that multiple equilibria can explain a considerable fraction of the global income gap. The model provides a test to distinguish the trapped countries from those which just suffer from a long-lasting demographic recession, showing that the latter are more common than the former. Therefore, the economic effects of the demographic transition, even though considerable, are temporary rather than permanent.demographic transition, optimal growth, multiple equilibria, poverty traps, calibrations

Population growth and multiple equilibria: Inferences from a modified Ramsey model

The demographic transition is introduced into the otherwise standard Ramsey model to generate multiple equilibria, poverty traps, and demography-driven cycles. The model is calibrated for global data to explore the demographic conditions under which multiplicity is realized. Three cases arise, referring either to unique or multiple equilibria, and to transitional cycles. The calibrated model shows that multiple equilibria can explain a considerable fraction of the global income gap. The model provides a test to distinguish the trapped countries from those which just suffer from a long-lasting demographic recession, showing that the latter are more common than the former. Therefore, the economic effects of the demographic transition, even though considerable, are temporary rather than permanent

Global Trends in Life Expectancy: A Club Approach

This paper discusses the post-war trends in life expectancy worldwide. Even though applying the specification test to a sample of 125 countries suggests that some life expectancy clubs exist, their number and borderlines are not properly distinguished by mechanical splits of the sample. Hence, the clubs are discovered by regression tree analysis. The potential threshold variables are initial per capita income, literacy, fertility change, and the HIV prevalence rate in 2005. Four clubs appear, characterized as High Literacy, Low Literacy, Medium Literacy, and High AIDS, between which considerable life expectancy differentials appear.Excluding the HIV prevalence rate from the threshold candidates re-allocates a considerable number of the members of the High AIDS club, indicating that incomes, literacy, and fertility are unable to predict AIDS completely. The similarity of economic and demographic conditions in the Low Literacy and High AIDS clubs, however, raises concerns about life expectancy convergence in the future

Demographic and Economic Consequences of the Post-war Mortality Decline in Developing Countries

Since World War II, mortality has decreased in the developing world. This paper explores the effects of this mortality fall on economic and demographic growth by a family-optimization model with endogenous fertility. Relative wealth yields utility through status for a family. The main findings are that the increased life expectancy generates an income stream which promotes fertility, but that the desire for status hampers fertility and warrants economic growth by preventing capital-diluting demographic expansion. If status-seeking is strong, population growth decreases below its original level in the long run. In the short run, population growth overshoots