ECIN Replication Package for "The Role of Foreign Capital Flows in Health Finance"

This study develops an open economy version of the Dalgaard and Strulik (2014) health deficit model to examine how rising health expenditures affect international capital flows, external balances, and welfare. The government issues bonds in international capital markets, linking health policy to international financial dynamics. Calibrated to the UK, the model evaluates income growth, medical innovation, and population aging shocks under balanced budget and deficit spending regimes. Results show that the source of health spending growth determines the direction of capital flows, and that deficit-financed health spending generally yields higher welfare by enabling additional health investment without higher domestic taxation.