infonet-economy

In this paper we study the implications of valuing health in an otherwise standard real business cycle model. We contrast the model predictions over the business cycle with
the corresponding data counterparts. We find that health can improve the predictions of the standard real business cycle model. In particular, the benchmark model with health improves the predictions in terms of the comovements between investment and market hours relative to output. Considering health in the environment also increases
the volatility of consumption, investment and market hours while slightly reducing output volatility. In terms of health observables the benchmark model is able to account
for practically all comovement between health outcomes and health expenditures as well as with output.