Nonlinear dynamics in an OLG growth model with young and old age labour supply: the role of public health expenditure

This paper analyses the dynamics of a two-dimensional overlapping generations model with young and old age labour supply. It is shown that the public provision of health investments, which, in turn, affects the demand for material consumption, may represent a source of local indeterminacy, nonlinear dynamics and multiplicity of equilibria. Furthermore, global indeterminacy may also occur because of the co-existence of two attractors with tangled basins of attraction.