Examination of the Endogeneity Between Macroeconomic Performance and Public Health Outcomes in Closed and Open-Economy Models

Abstract

As nations grapple with resource allocation decisions that simultaneously affect economic growth and population health, the complex relationship between macroeconomic performance and public health outcomes has emerged as a critical area of inquiry in contemporary economic research, particularly.  This paper examines the endogenous relationship between macroeconomic indicators and public health metrics through the lens of both closed and open-economy models, utilizing advanced mathematical frameworks to capture the bidirectional causality inherent in these systems. We develop a comprehensive theoretical model that incorporates feedback mechanisms between health capital formation, productivity growth, and aggregate economic performance, while accounting for international trade effects and capital mobility constraints. Our analysis reveals significant heterogeneity in the strength and direction of these relationships across different economic structures, with open economies demonstrating greater volatility but also enhanced adaptive capacity through external market integration. The findings suggest that traditional macroeconomic policy instruments may produce substantially different health outcomes depending on the degree of economic openness, with implications for optimal policy design in an increasingly interconnected global economy. We demonstrate that endogeneity bias in conventional estimation approaches can lead to systematic underestimation of the true causal effects, necessitating more sophisticated econometric methodologies. The research contributes to the growing literature on health economics by providing a unified theoretical framework that reconciles apparent contradictions in empirical findings across different country contexts and time periods.