Health, Taxes, and Growth

Liutang Gong, Hongyi Li (), Dihai Wang and Heng-Fu Zou ()

No 482, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

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.

Keywords: Health; Capital accumulation; Taxation (search for similar items in EconPapers)
JEL-codes: H0 I1 O3 O4 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011
New Economics Papers: this item is included in nep-dge and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Annals of Economics and Finance, May 2010, pages 73-94

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Journal Article: Health, Taxes, and Growth (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:482

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