Medical progress, demand for health care, and economic performance

Ivan Frankovic, Michael Kuhn and Stefan Wrzaczek

No 08/2017, ECON WPS - Working Papers in Economic Theory and Policy from TU Wien, Institute of Statistics and Mathematical Methods in Economics, Economics Research Unit

Abstract: We study medical progress within an economy of overlapping generations subject to endogenous mortality. Individuals demand health care with a view to lowering mortality over their life-cycle. We characterise the individual optimum and the general equilibrium of the economy and study the impact of improvements in the effectiveness of health care. We find that general equilibrium effects dampen strongly the increase in health care usage following medical innovation. Moreover, an increase in savings offsets the negative impact on GDP per capita of a decline in the support ratio.

Keywords: life-cycle model; longevity; health care; medical innovation; overlapping generations; value of life (search for similar items in EconPapers)
JEL-codes: D91 I11 I12 J11 J17 O31 O41 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-age, nep-dge and nep-hea
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuweco:082017

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