ENDOGENOUS HEALTH CARE, LIFE EXPECTANCY AND ECONOMIC GROWTH

We study the endogenous relationship between health care, life expectancy and output in a neoclassical growth model. Although health care directly diverts resources away from goods production, it prolongs life expectancy, which in turn leads to higher savings and, hence, capital formation through a private annuity market. We show that savings and health care are complements in equilibrium, with both rising with economic development. Our model is therefore consistent with several observed stylized development patterns across countries. Moreover, through the longevity-enhancing channel, health care and health production technology are found by simulation to be growth and welfare promoting.     

NEW ESTIMATES OF THE U.S. ECONOMY'S POTENTIAL GROWTH RATE

Using an Okun's law framework, the analysis here estimates potential growth for the 1990s as measured by both fixed- and chain-weighted GDP. It then decomposes estimated potential growth rates into labor productivity growth (LPG) and labor input growth (LIG) using a regression analysis to separate secular from cyclical changes. It compares estimates of potential output and trend productivity growth for the 1990s with estimates from earlier periods. Results indicate that eliminating the substitution bias associated with fixed-weight measures of real GDP raises estimated potential GDP growth in the 1980s but lowers it in the 1990s. A slowdown in labor force growth, with little or no change in long-term productivity growth, largely accounts for the implied slowdown in potential growth.     

THE DISTRIBUTIONAL CONSEQUENCES OF GOVERNMENT SPENDING AND TAXATION IN THE U.S., 1989 AND 2000

We assess the effects of government expenditures and taxation on household economic well-being in the United States in 1989 and 2000. Net government expenditure is estimated as the difference between government expenditures incurred on behalf of the household sector—transfers and public consumption—and the taxes paid by that sector. We incorporate the estimates of net government expenditures into a wealth-adjusted measure of income. We find that overall inequality in our income measure is considerably reduced by net government expenditures. Results from decomposition analysis show that the inequality-reducing effect of net government expenditures owed more to expenditures than to taxes.     

INTANGIBLE CAPITAL AND U.S. ECONOMIC GROWTH

Published macroeconomic data traditionally exclude most intangible investment from measured GDP. This situation is beginning to change, but our estimates suggest that as much as $800 billion is still excluded from U.S. published data (as of 2003), and that this leads to the exclusion of more than $3 trillion of business intangible capital stock. To assess the importance of this omission, we add intangible capital to the standard sources-of-growth framework used by the BLS, and find that the inclusion of our list of intangible assets makes a significant difference in the observed patterns of U.S. economic growth. The rate of change of output per worker increases more rapidly when intangibles are counted as capital, and capital deepening becomes the unambiguously dominant source of growth in labor productivity. The role of multifactor productivity is correspondingly diminished, and labor's income share is found to have decreased significantly over the last 50 years.     

EXPLAINING THE DECLINE OF THE U.S. SAVING RATE: THE ROLE OF HEALTH EXPENDITURE

The U.S. saving rate declined by 8% between 1980 and 2009. We document that the decline can be explained by rising health expenditures. Using exogenous variation in medical expenses generated by Food and Drug Administration drug approvals, we document that a 1 percentage point increase in health expenditure generated a decline in saving rate of 0.9 percentage points. We then estimate a model of household decisions to evaluate the mechanisms behind the decline. We find that the rise in health expenses and drop in saving rate are driven by progress in health technology, reduction in copayment rates, and improvements in income processes.     

MILITARY SPENDING,THREATS AND STOCHASTIC GROWTH

This paper analyses the impact of home military spending and foreign military threat on economic growth in a stochastic endogenous growth model involving the supply‐side and demand‐side effects produced by military spending. The paper states that an increase in home military spending affects economic growth through three channels, including the crowding‐out effect, the spin‐off effect, and the resource mobilization effect. The net effect which depends on these three channels is ambiguous. Hence, we demonstrate that there exists an optimal defence burden that maximizes the economic growth rate. Furthermore, the optimal defence burden depends on the degree of risk preference. Namely, the optimal defence burden of the risk‐loving agent is more than that of the risk‐neutral agent, and in turn is more than that of the risk‐averse agent. At the same time, we prove that the relationship between the volatility in military spending and economic growth also depends on the degree of risk preference. In addition, we show that greater volatility in foreign military spending leads to a decrease in home aggregate consumption, and hence speeds up economic growth in the home country.     

GROWTH IN THE SHADOWS: EFFECT OF THE SHADOW ECONOMY ON U.S. ECONOMIC GROWTH OVER MORE THAN A CENTURY

Taking a long‐term look at U.S. economic growth over 1870–2014, this paper focuses on the spillovers from the shadow or the unofficial economy to growth in the official sector. Shadow activities might spur or retard economic growth depending on their interactions with the formal sector and impacts on the provision of public goods. Nesting the analysis in a standard neoclassical growth model, we use a relatively new time series technique to estimate the short‐run dynamics and long‐run relationship between economic growth and its determinants. Results suggest that prior to World War II (WWII) the shadow economy had a negative effect on economic growth; however, post‐WWII the shadow economy was beneficial for growth. The sanding effect of the shadow economy in the earlier period is especially robust to alternate considerations of possible endogeneity and an alternate set of growth determinants. (JEL E26, O43, O51, K42)     

IS U.S. GROWTH UNDERSTATED BECAUSE OF THE UNDERGROUND ECONOMY? EMPLOYMENT RATIOS SUGGEST NOT

Has the underground economy caused the increase in United States GNP in recent years to be understated relative to earlier periods? The ratio of employment to population provides powerful evidence that it has not. This ratio’ was as high in the middle 1970s as in previous periods and in 1978–80 rose to its highest level of the postwar era, suggesting that employment growth has not been understated. Employment series based on both establishment reports and household surveys yield exceptionally high ratios in recent years. This article provides a step-by-step explanation of why employment data are pertinent to the question raised about GNP. This explanation may be summarized as follows. GNP measured as the sum of final products is not understated unless GNP measured as the sum of national income and other charges against GNP is also understated. Appreciable understatement of the growth of charges against GNP as a result of growth of the underground economy is highly unlikely in the absence of understatement of the growth of wages and salaries, because of the way the estimates are made. Understatement of the growth of wages and salaries without understatement of the growth of employment based on establishment reports is highly unlikely because of the way data are collected. The article explains briefly the relationship between income tax evasion and errors in measuring the various components of charges against GNP. It also explains how illegal activities are meant to be handled in GNP measurement.     

GROWTH AND WELL-BEING: INTRODUCING DISTRIBUTION-WEIGHTED GROWTH RATES TO REEVALUATE U.S. POST-WAR ECONOMIC PERFORMANCE

In order to improve on the income growth rate as an indicator of changes in well-being, four composite indices of growth and income distribution are introduced and compared. When applied to the United     

中美日三国经济增长质量比较:基于技术进步的角度

本文通过构造一个包含资本质量的柯布-道格拉斯形式的总量生产函数,对中美日三国1980—2007年的经济增长质量进行了详细的分析。分析结果表明,在整个考察期内,不同要素对于不同国家的经济发展所发挥的作用是不同的。但是,从总体上来看,全要素生产率的发展在三个国家的经济发展过程中均占据了非常重要的地位。同时,体现在资本质量上的技术进步对于不同国家则有不同的影响。尤其是对于日本经济而言,资本质量对日本经济发展发挥了关键性的作用,日本经济的资本质量状况长期阻碍了日本经济的发展,这一点能够为日本经济自20世纪90年代以来的长期低迷提供一种可能的解释。为了进一步分析三国的技术进步与经济增长之间的关系,本文同时又将整个考察期划分为三个子时期,并对三个子时期内不同要素对各个国家的经济发展贡献程度进行了考察,分析结果进一步确认了前面的结论。     

NATIONAL HEALTH CARE AND QUALITY OF SERVICE: LESSONS FROM MEDICAID

Much recent public debate centers around failures in the U.S. health care system. Studies indicate that as many as 33 million Americans are without health insurance, while health care expenditures continue to out-strip GNP growth. Numerous proposals for national health insurance have surfaced in response to these apparent shortcomings. The various proposed health insurance structures are not always based upon careful economic evaluation of incentive schemes and of the full range of potential effects. This paper examines results of recent Medicaid system studies so as to shed light upon the outcomes one can expect from national health insurance plans possessing similar incentive structures. The results here have potentially useful policy implications.     

DO HMOS ENCOURAGE PREVENTION? AN ANALYSIS OF ALTERNATIVE HEALTH CARE PLANS

We examine consumers' choice of preventive care and providers' choice of capacity (which affects the transaction costs of consuming health care) under alternative health care financing plans. We show that consumers choose Pareto-optimal prevention and providers choose optimal capacity under a pure feE-for-service (FFS) plan and under a mixed plan that includes an up-front fee and a fee for service. Under a pure prepaid plan, however, consumers may over- or underconsume prevention. In the former case, capacity restrictions under such a plan (e.g., long office waits, limited options) may be interpreted as a second-best response to overconsumption. We also find that the dollar costs of health care are higher under the prepaid plan. These conclusions cast doubt on some of the presumed advantages of HMOs.     

URBANIZATION AND HEALTH CARE IN RURAL CHINA

Strong economic growth has led to remarkable urbanization in China. Using the China Health and Nutrition Survey, this study provides the first empirical evidence documenting the impact of urbanization on rural health care and insurance. The primary finding is that urbanization leads to a significant and equitable increase in insurance coverage, which in turn plays a critical role in access to care. In addition, adverse selection exists in the demand for insurance. Income is also a significant determinant of insurance coverage. This study concludes that urbanization can help make substantial changes in rural health care and insurance status.     

THE EFFECT OF GOVERNMENT SPENDING ON ECONOMIC GROWTH: TESTING THE NON‐LINEAR HYPOTHESIS

Theoretical models suggest a non‐linear relationship between government size and long‐run economic growth. However, testing this hypothesis empirically in cross‐country studies is complicated by the endogeneity of government spending and the accurate identification of inflexion points. This paper examines the non‐linear hypothesis by incorporating threshold analysis in a cross‐country growth regression. The methodology utilizes a sample‐splitting framework and follows an objective strategy for identifying and testing changes in the slope. The results provide evidence in support of the non‐linear hypothesis for a broad panel of countries.     

PRODUCTIVE GOVERNMENT SPENDING,PATTERNS OF SPECIALIZATION AND ECONOMIC GROWTH IN A SMALL OPEN ECONOMY*

Constructing a two‐sector small open endogenous growth model with productive government spending, this paper examines patterns of specialization and the growth effects of fiscal policy. It is shown in this model that a change in income tax rate can cause a change in an equilibrium pattern of specialization. Because of this property, the relationship between the tax rate and the growth rate yields either a humped shape or a two‐humped shape, depending on world commodity prices. We also show that the growth maximizing tax rate is not necessarily equal to the tax rate that maximizes the level of social welfare.     

LONG-RUN GROWTH PROJECTIONS AND THE AGGREGATE PRODUCTION FUNCTION: A SURVEY OF MODELS USED BY THE U.S. GOVERNMENT

This paper examines the theory and method behind the long-run growth projections of four prominent models used within the U.S. government. The growth models of the Congressional Budget Ofice, the Social Security Administration, the Office of Management and Budget, and the General Accounting Office are all firmly based on the neoclassical framework of an aggregate production function, but several practical dfferences exist. Most notably, the CBO and GAO models endogenize capital accumulation, while the SSA and OMB simply assume that labor productivity growth will continue at historical rates. Although recent endogenous growth theory and the expanding empirical literature on cross-sectional variation emphasize alternative factors, the US. government agencies remain appropriately committed to the traditional, neoclassical framework as a tool for projecting long-run growth.