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Are Recessions Good for Your Health? A Macroeconomic Analysis

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  • Sheng-Ti Hung

    (University of Hawaii at Manoa)

  • Hui He

    (University of Hawaii at Manoa)

Abstract

This paper first documents several important business cycle properties of health expenditures across countries. We then develop a stochastic dynamic general equilibrium model with endogenous health accumulation. The model has three distinguished features: 1). Health enters into utility function; 2) Health enters into production function; 3). Both goods and time input are used to produce health stock. We calibrate the model to US economy. The results replicate the stylized facts of medical expenditure and health status over business cycles. We also investigate the relative importance of each feature in affecting the business cycle properties of health accumulation.

Suggested Citation

  • Sheng-Ti Hung & Hui He, 2011. "Are Recessions Good for Your Health? A Macroeconomic Analysis," 2011 Meeting Papers 1178, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:1178
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    File URL: https://economicdynamics.org/meetpapers/2011/paper_1178.pdf
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    References listed on IDEAS

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    1. Timothy J. Halliday & Hui He & Hao Zhang, 2009. "Health Investment over the Life-Cycle," Working Papers 200910, University of Hawaii at Manoa, Department of Economics.
    2. Daniel G. Sullivan & Till von Wachter, 2006. "Mortality, mass-layoffs, and career outcomes: an analysis using administrative data," Working Paper Series WP-06-21, Federal Reserve Bank of Chicago.
    3. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
    4. Gerdtham, Ulf-G. & Ruhm, Christopher J., 2006. "Deaths rise in good economic times: Evidence from the OECD," Economics & Human Biology, Elsevier, vol. 4(3), pages 298-316, December.
    5. Cutler, David M. & Knaul, Felicia & Lozano, Rafael & Mendez, Oscar & Zurita, Beatriz, 2002. "Financial crisis, health outcomes and ageing: Mexico in the 1980s and 1990s," Journal of Public Economics, Elsevier, vol. 84(2), pages 279-303, May.
    6. Fonseca, Raquel & Michaud, Pierre-Carl & Galama, Titus & Kapteyn, Arie, 2009. "On The Rise of Health Spending and Longevity," IZA Discussion Papers 4622, Institute for the Study of Labor (IZA).
    7. Ruhm, Christopher J., 2003. "Good times make you sick," Journal of Health Economics, Elsevier, vol. 22(4), pages 637-658, July.
    8. Fonseca, Raquel & Michaud, Pierre-Carl & Galama, Titus & Kapteyn, Arie, 2009. "On The Rise of Health Spending and Longevity," IZA Discussion Papers 4622, Institute for the Study of Labor (IZA).
    9. Mendez, Oscar & Cutler, David & Knaul, Felicia & Lozano, Rafael & Zurita, Beatriz, 2002. "Financial Crisis, Health Outcomes, and Aging: Mexico in the 1980s and 1990s," Scholarly Articles 2707939, Harvard University Department of Economics.
    10. Douglas L. Miller & Marianne E. Page & Ann Huff Stevens & Mateusz Filipski, 2009. "Why Are Recessions Good for Your Health?," American Economic Review, American Economic Association, vol. 99(2), pages 122-127, May.
    11. Gerdtham, Ulf-G. & Johannesson, Magnus, 2005. "Business cycles and mortality: results from Swedish microdata," Social Science & Medicine, Elsevier, vol. 60(1), pages 205-218, January.
    12. Kevin X. D. Huang & Gregory W. Huffman, 2010. "A Defense of the Current US Tax Treatment of Employer-Provided Medical Insurance," Vanderbilt University Department of Economics Working Papers 1001, Vanderbilt University Department of Economics.
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