Health, Taxes, and Growth

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

Annals of Economics and Finance, 2010, vol. 11, issue 1, pages 73-94

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)
Date: 2010
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Related works:
Working Paper: Health, Taxes, and Growth (2011)
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Persistent link: http://EconPapers.repec.org/RePEc:cuf:journl:y:2010:v:11:i:1:p:73-94

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