Health, Environment, and Wealth

This paper proposes a dynamic economic growth model with endogenous environment, health, and wealth. The economy is composed of environment, capital good, health caring, and consumer good sectors. We model the production technologies and economic structure on the basis of neoclassical growth theory. We apply Zhang`s approach to the household behavior in modelling consumption and saving with the alternative concept of disposable income. The government collects taxes on the production sectors` outputs and consumers` consumption, wealth interest income, and wage income. After building the model with wealth accumulation, health change, and environmental dynamics, we show properties of the dynamic system by simulation. We depict the movement of the economic system over time. We also carry out comparative dynamic analysis to show how transitory processes and long-run equilibrium are affected when the system is subject to different exogenous changes. We get some insightful conclusions about complicated trade-offs between environmental taxation, wealth accumulation, health change, environment change, and economic structures.