Nonlinear Dynamics in an OLG Growth Model with Young and Old Age Labour Supply: The Role of Public Health Expenditure

This study analyses the dynamics of a two-dimensional overlapping generations economy with young and old age labour supply. We show that the public provision of investments in health, which, in turn, affects the demand for material consumption of the old-aged, may represent a source of local indeterminacy, nonlinear dynamics and multiplicity of equilibria. Moreover, global indeterminacy may also occur because of the co-existence either of two saddles or two attractors with complex basins of attraction.