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Health Insurance, Liquidity and Growth
Author(s) -
Carmichael Benoit,
Dissou Yazid
Publication year - 2000
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00199
Subject(s) - economics , institution , context (archaeology) , market liquidity , endogenous growth theory , monetary economics , public economics , economic growth , paleontology , political science , law , biology , human capital
Within the context of an endogenous growth model, it is shown that in the presence of health risks which influence household income, the introduction of a private insurance company increases the long‐term economic growth rate. The introduction of such an institution has two effects on savings: a level effect and a composition effect. Although the presence of this risk‐reducing institution induces a decrease in the level of total savings, as suggested in earlier papers, the rate of illiquid savings, which contribute to growth, increases. JEL Classification E 1; G 2; O 1; O 4