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Modeling the Macroeconomic Impact of HIV/AIDS
Author:
Mr. Markus Haacker
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Series:
IMF Working Papers
Volume/Issue:
Volume 2002: Issue 195
Language:
English
Publication Date:
01 Nov 2002
DOI:
https://doi.org/10.5089/9781451859928.001
ISBN:
9781451859928
ISSN:
1018-5941
Pages:
23
Keywords:
WP; dual economy; Economic Growth; Capital Mobility; HIV/AIDS; Africa; dual-economy model; savings rate; dual economy setting; closed-economy model; HIV and AIDS; Personal income; Unskilled labor; Capital productivity; Unemployment; Sub-Saharan Africa
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund