Health Macro

about this course

This course continues the study of economic growth and fluctuations that we undertook in the introductory course. It explores short-run and long-run economic performance and the fiscal and monetary tradeoffs that policymakers face.

And it extends that framework to topics relevant to health professionals. In this course, we apply the theory of economic growth to the study of drug addiction. And we explore the relationship between consumer price inflation and medical price inflation.

what you will learn

This course will first review the theory of economic growth and explore the role that capital investment plays in increasing worker productivity. It will then extend that theoretical framework to "investment" in the consumption of an addictive good.

In the model of economic growth, the economy converges to a steady-state, where output per worker remains constant over time. And in the model of drug addiction, there is also a steady-state where consumption remains constant over time.

And being a course in macroeconomics for health professionals, this course also examines the reasons why medical prices have grown faster than consumer prices.

links and files

course outline

  • lecture 1 – introduction and math review

  • lecture 2 – production process

  • lecture 3 – distribution and allocation of national income

  • lecture 4 – economic growth
    • my Lecture 4, Lecture 5, Lecture 6 and Lecture 7 (PDF)
    • Wikipedia. Solow-Swan model
    • Solow (QJE, 1956). "Contribution to the Theory of Economic Growth."
    • Mankiw, D. Romer and Weil (QJE, 1992). "Contribution to the Empirics of Economic Growth."
    • D. Romer (1996). Advanced Macroeconomics:
      • p. 32-33 and 137-140 – empirical tests of the Solow Model

  • lecture 4 (health focus) – "rational addiction" as an example of Solow Model dynamics
    • my notes on "Rational Addiction" (PDF)
    • Becker and Murphy (JPE, 1988). "A Theory of Rational Addiction."
    • Becker, Grossman and Murphy (AER, 1991). "Rational Addiction and the Effect of Price on Consumption."
    • Becker, Grossman and Murphy (AER, 1994). "Empirical Analysis of Cigarette Addiction."
    • Grossman and Chaloupka (JHE, 1998). "The Demand for Cocaine by Young Adults."

  • lecture 5 – money and inflation in the long run

  • lecture 5 (health focus) – consumer price inflation vs. medical price inflation
    • Folland, Goodman, Stano:
      • p. 8 – consumer price inflation vs. medical price inflation
      • p. 121-126 – "cost-increasing" vs. "cost-decreasing" technological change
      • p. 454-464 – Medicare and Medicaid's effect on health care costs
      • p. 505-510 – Affordable Care Act

  • lecture 6 – economic fluctuations

  • lecture 7 – trade-off between unemployment and inflation


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