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

my intro to macro course
my growth macro course

my negative real interest rates lecture
my notes on interest rates, growth rates, discounting and time preference (PDF)

course outline

lecture 1 – introduction and math review

my Lecture 1 (PDF)

lecture 2 – production process

my Lecture 2 (PDF)
my Why does a Firm Maximize Profit where MR equals MC? (PDF)
my Notes on Profit Maximization (PDF)
my Notes on the Zero Profit Result (PDF)

lecture 3 – distribution and allocation of national income

my Lecture 3 (PDF)

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

my Lecture 10 (PDF)
Economist (1999). "Monopoly power over money"
Economist (2008). "Federal Reserve: Plan B"
Keister and McAndrews (2009). "Why Are Banks Holding So Many Excess Reserves?"

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

my Lecture 11, Lecture 12 and Lecture 13 (PDF)

lecture 7 – trade-off between unemployment and inflation

my Lecture 9 and Lecture 14 (PDF)

textbooks

Folland, Goodman and Stano. The Economics of Health and Health Care
my macro lecture notes (PDF)