Endogenous health investment, saving and growth : a theoretical study with an application to Chinese data

Abstract

The idea behind this thesis stems from the existing abundance of empirical studies suggesting the strong correlation between longevity and economic growth. In a simple two period overlapping-generation framework, we establish a direct link between health investment and economic growth through endogenous survival rate. We find that health expenditure complements saving in equilibrium, thereby contributes to economic growth, which in turn leads to a further increase in health investment. The simulation with calibrated parameters also manifests the consistence between our results and the worldwide data as well as the fact of China.