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A note on infectious disease, economic growth, and related government policy

Published online by Cambridge University Press:  16 June 2022

Chia-Hui Lu
Chia-Hui Lu*
Affiliation:
Department of Economics, National Taipei University, Taipei, Taiwan
*
Email: chiahuilu.chlu@gmail.com
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Abstract

Introducing susceptible-infected-recovered epidemiology dynamics with vaccines into an endogenous growth model, we investigate the impact of government infectious disease policy on macroeconomic performance. We find that any expenditure that improves health, whether to reduce the contact rate or increase the recovery rate or the vaccination rate, and regardless of whether it comes directly from the households or the government, has a positive impact on economic growth, but does not necessarily improve the welfare. The reason people’s health has improved but their welfare has fallen is because government expenditures must be covered by taxes, which will reduce their disposable income and consumption.

Keywords

Economic growthepidemiologyinfectious diseaseswelfare
Type
Articles
Information
Macroeconomic Dynamics , Volume 27 , Issue 5 , July 2023 , pp. 1481 - 1494
Copyright
© The Author(s), 2022. Published by Cambridge University Press

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Footnotes

*

This study was funded by the Ministry of Science and Technology of Taiwan (grant number MOST 110-2410-H-305-056-MY3).

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