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Health, Taxes, and Growth

Author

Listed:
  • Liutang Gong

    (Guanghua School of Management, Peking University)

  • Hongyi Li

    (BA Faculty, Chinese University of Hong Kong)

  • Dihai Wang

    (School of Economics, Fudan University)

  • Heng-fu Zou

    (CEMA, Central University, China
    School of Advanced Study (SAS), Shenzhen University, China
    IAS, Wuhan University, China
    Guanghua School of Management, Peking University, China)

Abstract

This paper studies capital accumulation and consumption in the traditional Ramsey model under an exogenous growth framework. The model has three important features: (1) treating health as a simple function of consumption, which enable the study of health and growth in an aggregate macroeconomic model; (2) the existence of multiple equilibria of capital stock, health, and consumption, which is more consistent with the real world situation-rich countries may end up with high capital, better health, and higher consumption than poor countries; (3) the fundamental proposition of a consumption tax instead of capital taxation from the traditional growth model does not hold anymore in our model. As long as consumption goods contribute to health formation, the issue of a consumption tax versus an income (or capital) tax should be re-examined.

Suggested Citation

  • Liutang Gong & Hongyi Li & Dihai Wang & Heng-fu Zou, 2011. "Health, Taxes, and Growth," CEMA Working Papers 482, China Economics and Management Academy, Central University of Finance and Economics.
  • Handle: RePEc:cuf:wpaper:482
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lorenz, Olga & Goerke, Laszlo, 2015. "Commuting and Sickness Absence," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113173, Verein für Socialpolitik / German Economic Association.
    2. Hess, Tim & Andersson, Ulrika & Mena, Carlos & Williams, Adrian, 2015. "The impact of healthier dietary scenarios on the global blue water scarcity footprint of food consumption in the UK," Food Policy, Elsevier, vol. 50(C), pages 1-10.
    3. Golub, Alexander & Toman, Michael, 2014. "Climate change, industrial transformation, and"development traps"," Policy Research Working Paper Series 6951, The World Bank.
    4. Alexander Golub & Michael Toman, 2016. "Climate Change, Industrial Transformation, and “Environmental Growth Traps”," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(2), pages 249-263, February.
    5. Wang, Chan, 2012. "A very preliminary survey on growth and development," MPRA Paper 39037, University Library of Munich, Germany.
    6. Chakravarty, Sugato & Pylypiv, Mariya I., 2015. "The Role of Subsidization and Organizational Status on Microfinance Borrower Repayment Rates," World Development, Elsevier, vol. 66(C), pages 737-748.
    7. Barnes, Andrew J. & Unruh, Lynn & Chukmaitov, Askar & van Ginneken, Ewout, 2014. "Accountable care organizations in the USA: Types, developments and challenges," Health Policy, Elsevier, vol. 118(1), pages 1-7.

    More about this item

    Keywords

    Health; Capital accumulation; Taxation;

    JEL classification:

    • H0 - Public Economics - - General
    • I1 - Health, Education, and Welfare - - Health
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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