Post-Pandemic Health Economics Policy: Rethinking Fiscal Responsibility in Times of Global Crisis

Purpose This study investigates the role of fiscal health spending in post-pandemic economic recovery by employing a dynamic stochastic general equilibrium (DSGE) model. The objective is to analyse how health expenditures influence key macroeconomic variables, such as output, labour productivity, and public debt, during and after a pandemic. Methods The DSGE model incorporates health dynamics and simulates three scenarios: (i) no additional health spending, (ii) moderate health spending (2% of GDP), and (iii) high health spending (5% of GDP). The model evaluates the fiscal multiplier of health spending and its effect on economic recovery, output, and government debt. Findings Results show that increased health spending significantly improves labour productivity and accelerates economic recovery. In the high-spending scenario, each dollar spent on health yields a 2.0 multiplier in output growth. However, the initial rise in government debt requires long-term fiscal adjustments to maintain sustainability. Conclusion Health investment is crucial for mitigating the economic impacts of pandemics, and it should be integrated into post-pandemic fiscal strategies for both short-term recovery and long-term economic resilience.