Modeling the Macroeconomic Impact of HIV/AIDS

November 1, 2002

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Format: Chicago

Markus Haacker. Modeling the Macroeconomic Impact of HIV/AIDS, (USA: International Monetary Fund, 2002) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper addresses the impact of HIV/AIDS on per capita output and income, with particular emphasis on the role of labor mobility between the formal and informal sectors, and the impact of the epidemic on investment decisions. The study finds that HIV/AIDS affects both the supply of labor and the demand for labor in the formal sector. Only if there is a significant rise in the capital-labor ratio, will there be an increase in formal sector employment. However, this is associated with a decline in the rate of return to capital. To the extent that companies respond to this by reducing investment, conventional models underestimate the adverse impact on employment, per capita output, and income. The analysis of the impact of HIV/AIDS on output is complemented by an assessment of the impact on income.

Subject: Capital productivity, Health, HIV and AIDS, Labor, National accounts, Personal income, Production, Unemployment, Unskilled labor

Keywords: Africa, Capital Mobility, Capital productivity, Closed-economy model, Dual economy, Dual economy setting, Dual-economy model, Economic Growth, HIV and AIDS, HIV/AIDS, Personal income, Savings rate, Sub-Saharan Africa, Unemployment, Unskilled labor, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2002/195
Stock No:

WPIEA1952002
ISBN:

9781451859928
ISSN:

1018-5941

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