Health Insurance, Liquidity and Growth

Benoit Carmichael and Yazid Dissou ()

Scandinavian Journal of Economics, 2000, vol. 102, issue 2, pages 269-84

Abstract: Within the context of an endogenous growth model, it is shown that in the presence of health risks which influence household income, the introduction of a private insurance company increases the long-term economic growth rate. The introduction of such an institution has two effects on savings: a level effect and a composition effect. Although the presence of this risk-reducing institution induces a decrease in the level of total savings, as suggested in earlier papers, the rate of illiquid savings, which contribute to growth, increases. Copyright 2000 by The editors of the Scandinavian Journal of Economics.

Date: 2000
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