Child allowances, fertility, and chaotic dynamics
Journal
Chaos
Journal Volume
23
Journal Issue
2
Date Issued
2013
Author(s)
Abstract
This paper analyzes the dynamics in an overlapping generations model with the provision of child allowances. Fertility is an increasing function of child allowances and there exists a threshold effect of the marginal effect of child allowances on fertility. We show that if the effectiveness of child allowances is sufficiently high, an intermediate-sized tax rate will be enough to generate chaotic dynamics. Besides, a decrease in the inter-temporal elasticity of substitution will prevent the occurrence of irregular cycles.
Type
journal article