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Substituting Leisure for Health Expenditure: A General Equilibrium-Based Empirical Investigation

Author

Listed:
  • Kevin x.d. Huang

    (Vanderbilt University)

  • Hui He

    (Shanghai University of Finance and Economics)

  • Sheng-ti Hung

    (University of Hawai''i at Manoa)

Abstract

We develop a general equilibrium macroeconomic model with endogenous health accumulation, and we use the model's equilibrium condition to estimate the elasticity of substitution between medical care and leisure time in maintaining health, based on a cross-country panel dataset. Our econometric estimates imply that increasing health-enhancing leisure time may substantially reduce the nation's medical expenditure and help resolve its pressing fiscal uncertainty. Our study highlights the importance of several current nationwide campaigns aimed at improving national health status, from not only health but macroeconomic perspectives. Our study also provides a guidance to a growing macro-health literature in modeling health production.

Suggested Citation

  • Kevin x.d. Huang & Hui He & Sheng-ti Hung, 2013. "Substituting Leisure for Health Expenditure: A General Equilibrium-Based Empirical Investigation," Vanderbilt University Department of Economics Working Papers 13-00020, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:vuecon-sub-13-00020
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    References listed on IDEAS

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    Cited by:

    1. Hui He & Kevin x.d. Huang, 2013. "Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis," Vanderbilt University Department of Economics Working Papers 13-00005, Vanderbilt University Department of Economics.
    2. Hui He & Kevin X.D. Huang & Lei Ning, 2019. "Why Do Americans Spend So Much More on Health Care than Europeans? (REVISED)," Vanderbilt University Department of Economics Working Papers 19-00008, Vanderbilt University Department of Economics.
    3. Hui He & Kevin X.D. Huang & Lei Ning, 2021. "Why Do Americans Spend So Much More On Health Care Than Europeans?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(4), pages 1363-1399, November.
    4. He, Qichun, 2018. "Inflation and health in a Schumpeterian growth model: Theory and evidence," Economic Modelling, Elsevier, vol. 75(C), pages 159-168.
    5. Hui He & Kevin x.d. Huang & Lei Ning, 2019. "Why Do Americans Spend So Much More on Health Care than Europeans? (REVISED)," Vanderbilt University Department of Economics Working Papers 19-00008, Vanderbilt University Department of Economics.
    6. He, Qichun, 2018. "Health and Innovation in a Monetary Schumpeterian Growth Model," MPRA Paper 85218, University Library of Munich, Germany.

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    More about this item

    Keywords

    general equilibrium; macro-health; health care; leisure time; elasticity of substitution; fiscal uncertainty;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • I1 - Health, Education, and Welfare - - Health

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