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National Health Expenditure, Health Improvement and Government Funds: A Macroeconomic Analysis

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Title: National Health Expenditure, Health Improvement and Government Funds: A Macroeconomic Analysis
Authors: Hung, Sheng Ti
Issue Date: Dec 2016
Publisher: [Honolulu] : [University of Hawaii at Manoa], [December 2016]
Abstract: With the increasing attention to the role of health status in securing economic development, we focus the relation between national health status and national health expenditure. The first chapter documents several important business cycle properties of health status and health expenditures in US. We find that health expenditure is pro-cyclical while health status is counter-cyclical. A macro-health model with survival probability dependent on health history builds in an RBC framework three channels of endogenous health accumulation in several scientific disciplines: (1) health affects utility; (2) health affects productivity but depreciates with labor or production; (3) health is maintained with medical care or leisure activity. We found channel 2 and 3 are key for explaining the cyclical behaviors of health variable while broader features of data also favor a model without channel 1.
In the second chapter, we develop a general equilibrium macroeconomic model with endogenous health accumulation and use the model’s equilibrium condition to estimate the elasticity of substitution between medical care and leisure time in maintaining health, based on a cross-country dataset constructed from OECD, World Bank and Conference Board. The data constructed cover two years 2005 and 2008 and the sample includes 35 countries. By developing a structural model to help empirically estimate the relationship between medical care and leisure time in health production, our econometric estimation shows that increasing health-enhancing leisure time may substantially reduce the nation’s medical expenditure and help mitigate its pressing fiscal uncertainty.
Additional robustness checks on our estimation results are also conducted by controlling income heterogeneity, alternative sample selection and data construction methods. Health
production function is a key ingredient of above mentioned macro-health models with endogenous health accumulation. The implication of this paper supports the importance of several current nationwide campaigns aiming at improving national health status and also contributes to a growing literature which employs a macroeconomic framework to study different aspects of health care system in the US. Our “back-of-envelope” calculation suggests that, even some moderate increase in health enhancing leisure time may lead to a substantial reduction in national health expenditure.
Other than cutting national health expenditure to mitigate the looming fiscal uncertainty, in the third chapter, we study in sovereign wealth funds and consider it as a possible alternative generating revenue for macroeconomic purpose. With growing recognition of Sovereign Wealth Funds (SWF) becoming an important player in global financial markets, some concerns about the impact of Sovereign Wealth fund on the financial market, with respect to their fund scale and establishment, have been raised and debated in a great deal of literature. This paper makes three contributions: (1) This study chooses the samples based on Sovereign fund’s investment portfolios, and finds that the international reserves to foreign debt ratio is important to the determination of setting up SWF; (2) The fund size is positively associate with international reserves and GDP per capital and do not depend on current account; (3) By examining governance indicators, this study finds that certain characteristics of governance appear to be crucial to the development of SWFs.
Description: Ph.D. University of Hawaii at Manoa 2016.
Includes bibliographical references.
URI/DOI: http://hdl.handle.net/10125/51605
Appears in Collections:Ph.D. - Economics


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