Are Recessions Good for Your Health? A Macroeconomic Analysis

Sheng-Ti Hung and Hui He ()
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Sheng-Ti Hung: University of Hawaii at Manoa

No 1178, 2011 Meeting Papers from Society for Economic Dynamics

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.

Date: 2011
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