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TAXATION AND PUBLIC HEALTH INVESTMENT: POLICY CHOICES AND TRADEOFFS

Published online by Cambridge University Press:  26 June 2019

Manoj Atolia ,
Chris Papageorgiou  and
Stephen J. Turnovsky
Manoj Atolia
Affiliation:
Florida State University
Chris Papageorgiou
Affiliation:
International Monetary Fund
Stephen J. Turnovsky*
Affiliation:
University of Washington
*
Address correspondence to: Stephen Turnovsky, Department of Economics, University of Washington, Box 353330, Seattle, WA 98195, USA, e-mail: [email protected]. Phone: +1(206) 685-8028. Fax: +1(206) 685 7477.
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Abstract

In recent years, there has been an explosive increase in the demand for health products and services by people all around the globe, and particularly in advanced economies. Aiming to enhance longevity and also to improve quality of life, individual consumption of pharmaceutical products and services has risen exponentially since the early 1980s. This paper develops a model in which agents invest part of their resources in medical products and time in physical exercise to enhance their health status. In the first part of the paper, we study the steady state and transitional dynamics of the model with special emphasis on the effects of health decisions on aggregate outcomes. In the second part, we explore how public health policies may alter private economic decisions that promote healthier and more productive lives.

Keywords

Private and Public Health InvestmentsEndogenous Discounting of the Rate of Time PreferenceNeoclassical Growth ModelHealth Policy
Type
Articles
Information
Macroeconomic Dynamics , Volume 25 , Issue 2 , March 2021 , pp. 426 - 461
Copyright
© Cambridge University Press 2019

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Footnotes

We thank David Canning, Shankha Chakraborty, Oksana Leukhina, Fidel Perez-Sebastian, Kenichi Ueda, and Marios Zachariadis, two referees, and an associate editor for valuable comments and suggestions. We also thank Suhaib Kebhaj for excellent research assistance. The views expressed in this study are the sole responsibility of the authors and should not be attributed to the International Monetary Fund, its Executive Board, or its management.

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