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Limited Bedding and Nesting as a Model for Early-Life Adversity in Mice
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Child allowances, fertility, and chaotic dynamics.

Hung-Ju Chen1, Ming-Chia Li

  • 1Department of Economics, National Taiwan University, Taipei, Taiwan. hjc@ntu.edu.tw

Chaos (Woodbury, N.Y.)
|July 5, 2013
PubMed
Summary

Child allowances can lead to chaotic economic dynamics, even with moderate tax rates, if they significantly boost fertility. Lowering inter-temporal substitution can stabilize these cycles.

Area of Science:

  • Economics
  • Mathematical Economics
  • Demographics

Background:

  • Overlapping generations models are standard for analyzing long-term economic behavior.
  • Child allowances are a common policy tool with potential demographic impacts.
  • Fertility decisions are complex and can be influenced by economic incentives.

Purpose of the Study:

  • To analyze the dynamic economic consequences of child allowances.
  • To investigate the relationship between child allowances, fertility, and economic stability.
  • To identify conditions under which chaotic dynamics may emerge.

Main Methods:

  • Utilizing an overlapping generations model.
  • Incorporating fertility as an increasing function of child allowances.

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  • Analyzing the impact of tax rates and inter-temporal elasticity of substitution on model dynamics.

    • Main Results:

    • Fertility shows a threshold effect in response to child allowances.
    • Sufficiently effective child allowances combined with intermediate tax rates can induce chaotic dynamics.
    • Decreased inter-temporal elasticity of substitution mitigates irregular economic cycles.

    Conclusions:

    • Child allowance policies can have profound and complex effects on economic stability.
    • Policy design, including tax rates and the responsiveness of fertility, is crucial for avoiding unintended chaotic dynamics.
    • Understanding the interplay between economic incentives and demographic behavior is key for stable economic policy.