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Insurance and Optimal Growth

Abstract : The aim of this paper is to propose a theoretical connection between insurance and economic growth. We develop a simple model to insert microeconomically founded optimal insurance with moral hazard in a standard macroeconomic framework of optimal growth. We characterize the long-run equilibrium, the global dynamics and the evolution of insurance coverage with time. Three types of trajectories are identified: first, a simple dynamics with permanent partial insurance or full insurance, second, one with regime switching converging to a steady state with full or partial insurance and, finally, one with mixed equilibrium.
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  • HAL Id : hal-00972774, version 1
  • SCIENCESPO : 2441/4422

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Frédéric Gannon, Vincent Touze. Insurance and Optimal Growth. 2007. ⟨hal-00972774⟩

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