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Macroeconomic Effects of Healthcare Financing in Colombia

Author

Listed:
  • SCAR VILA-MONTEALEGRE

    (Banco de la Rep blica)

  • JUAN J. OSPINA-TEJEIROMARIO

    (Banco de la Rep blica)

  • MARIO A. RAMOS-VELOZA

    (Banco de la Rep blica)

Abstract

Real healthcare expenditure in Colombia is projected to rise 49% over the next eight years due to population aging, rising costs, and domestic policies, adding significant pressure to public finances. Using a dynamic general equilibrium model with heterogeneous households, we analyze the macroeconomic impact of financing higher healthcare expenditure through different taxes in a context of high informality. While consumption taxes are the best option in terms of output, financing with taxes on high-skilled labor improves income distribution with similar effects on production. Population aging adds pressure on aggregate dynamics by reducing labor supply, savings, and capital accumulation.

Suggested Citation

  • Scar Vila-Montealegre & Juan J. Ospina-Tejeiromario & Mario A. Ramos-Veloza, 2025. "Macroeconomic Effects of Healthcare Financing in Colombia," Hacienda Pública Española / Review of Public Economics, IEF, vol. 254(3), pages 59-85, September.
    • Handle: RePEc:hpe:journl:y:2025:v:254:i:3:p:59-85
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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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