AIDS and dualism: Ethiopia's burden under rational expectations

Research output: Working paperDiscussion paper

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Abstract

An AIDS epidemic threatens Ethiopia with a long wave of premature adult mortality, and thus with an enduring setback to capital formation and economic growth. The authors develop a two-sector model with three overlapping generations and intersectorally mobile labor, in which young adults allocate resources under rational expectations. They calibrate the model to the demographic and economic data, and perform simulations for the period ending in 2100 under alternative assumptions about mortality with and without the epidemic. Although the epidemic does not bring about a catastrophic economic collapse, which is hardly possible in view of Ethiopia's poverty and high background adult mortality, it does cause a permanent, downward displacement of the path of output per head, amounting to 10 percent in 2100. An externally funded program to combat the disease is socially very profitable.
Original languageEnglish
Publication statusPublished - 2009

Publication series

NamePolicy Research Working Paper, The World Bank, Washington, DC
No.4919

Fingerprint

Dualism
Mortality
Rational expectations
Ethiopia
Burden
Simulation
Overlapping generations
Young adults
Resources
Economic data
Economics
Capital formation
Poverty
Demographics
Labor
Economic growth
Two-sector model
Long waves

Cite this

Bell, C., & Koukoumelis, A. (2009). AIDS and dualism: Ethiopia's burden under rational expectations. (Policy Research Working Paper, The World Bank, Washington, DC; No. 4919).

AIDS and dualism: Ethiopia's burden under rational expectations. / Bell, Clive; Koukoumelis, Anastasios.

2009. (Policy Research Working Paper, The World Bank, Washington, DC; No. 4919).

Research output: Working paperDiscussion paper

Bell, C & Koukoumelis, A 2009 'AIDS and dualism: Ethiopia's burden under rational expectations' Policy Research Working Paper, The World Bank, Washington, DC, no. 4919.
Bell C, Koukoumelis A. AIDS and dualism: Ethiopia's burden under rational expectations. 2009. (Policy Research Working Paper, The World Bank, Washington, DC; 4919).
Bell, Clive ; Koukoumelis, Anastasios. / AIDS and dualism: Ethiopia's burden under rational expectations. 2009. (Policy Research Working Paper, The World Bank, Washington, DC; 4919).
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