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| Hui He and Kevin x.d. Huang |
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| ''Why Do Americans Spend So Much More on Health Care than Europeans?--A General Equilibrium Macroeconomic Analysis'' |
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| Empirical evidence suggests that both leisure time and medical care
are important for maintaining health. We develop a general
equilibrium macroeconomic model in which taxation is a key
determinant of the composition of these two inputs in the endogenous
accumulation of health capital. In our model, higher taxes lead to
using relatively more leisure time and less medical care in
maintaining health. We find that the difference in taxation can
account for a large fraction of the difference in health
expenditure-GDP ratio and almost all of the difference in time input
for health production between the US and Europe. |
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| Keywords: Taxation, Time allocation, Health expenditure, Macroeconomics, General equilibrium |
JEL: E0 - Macroeconomics and Monetary Economics: General
H0 - Public Economics: General |
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| Manuscript Received : Feb 21 2013 | | Manuscript Accepted : Mar 25 2013 |
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