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US Health and Aggregate Fluctuations

Aleksandar Vasilev

Bulgarian Economic Papers (www.bep.bg) from St Kliment Ohridski University of Sofia, Faculty of Economics and Business Administration / Center for Economic Theories and Policies

Abstract: This paper aims to shed light on the importance of health considerations for business cycle uctuations and the effect of health status on labor productivity and availability of labor input for productive use. To this end, Grossman's (2000) partial-equilibrium framework with endogenous health is incorporated in an otherwise standard Real-Business-Cycle (RBC) model. Health status in this setup is modelled as a utility-enhancing, intangible, and non-transferrable capital stock, which depreciates over time. The household can improve their health ("produce health") through investment using a health-recovery technology. The main results are: (i) overall, the model compares well vis-a-vis data; (ii) the behavior of the price of healthcare is adequately approximated by the shadow price of health in the model; (iii) the model-generated health variable exhibits moderate- to high correlation with a large number of empirical health indicators.

Keywords: real business cycles; health status; health investment (search for similar items in EconPapers)
JEL-codes: E32 E37 I11 I13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-hea and nep-mac
Date: 2015-02, Revised 2015-02
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https://www.uni-sofia.bg/index.php/eng/content/dow ... file/BEP-2015-01.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: US HEALTH AND AGGREGATE FLUCTUATIONS (2017) Downloads
Journal Article: US Health and Aggregate Fluctuations (2016) Downloads
Working Paper: US Health and Aggregate Fluctuations (2016) Downloads
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