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Government Health Expenditures and Health Outcomes

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Author Info

  • Farasat A.S. Bokhari

    ()
    (Department of Economics, Florida State University)

  • Yunwei Gai

    ()
    (Department of Economics, Florida State University)

  • Pablo Gottret

    ()
    (Health Systems Development Cluster, World Bank)

Abstract

This paper provides econometric evidence linking a country's per capita government health expenditures and per capita income to two health outcomes: under-five mortality and maternal mortality. Using instrumental variables techniques (GMM-H2SL), we estimate the elasticity of these outcomes with respect to government health expenditures and income while treating both variables as endogenous. Consequently, our elasticity estimates are larger in magnitude than those reported in literature, which may be biased up. The elasticity of under-five mortality with respect to government expenditures ranges from -.25 to -.42 with a mean value of -.33. For maternal mortality the elasticity ranges from -.42 to -.52 with a mean value of -.50. For developing countries, our results imply that while economic growth is certainly an important contributor to health outcomes, government spending on health is just as important a factor.

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File URL: http://dx.doi.org/10.1002/hec.1157
File Function: First version, 2005-02
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Bibliographic Info

Paper provided by Department of Economics, Florida State University in its series Working Papers with number wp2005_02_01.

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Length: 23
Date of creation: Feb 2005
Date of revision: May 2006
Handle: RePEc:fsu:wpaper:wp2005_02_01

Note: Forthcoming in Health Economics.
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Related research

Keywords: Under-five mortality; maternal-mortality; millennium development goals; government expenditures; elasticity;

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References

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  1. Gangagharan, L. & Valenzuela, M.R., 2000. "Interrelationships between Income, Health and the Environment: Extending the Environmental Kuznets Curve Hypothesis," Department of Economics - Working Papers Series 740, The University of Melbourne.
  2. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  3. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 133-150, Winter.
  5. Musgrove, P., 1996. "Public and Private Roles in Health," World Bank - Discussion Papers 339, World Bank.
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Citations

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Cited by:
  1. Wagstaff, Adam, 2008. "Fungibility and the impact of development assistance: evidence from Vietnam's health sector," Policy Research Working Paper Series 4800, The World Bank.
  2. Herrera, Santiago & Pang, Gaobo, 2005. "Efficiency of public spending in developing countries : an efficiency frontier approach," Policy Research Working Paper Series 3645, The World Bank.
  3. Jean-Paul Moatti & Bruno Ventelou, 2009. "Économie de la santé dans les pays en développement des paradigmes en mutation," Revue économique, Presses de Sciences-Po, vol. 60(2), pages 241-256.
  4. Marwa Farag & A. NandaKumar & Stanley Wallack & Dominic Hodgkin & Gary Gaumer & Can Erbil, 2012. "The income elasticity of health care spending in developing and developed countries," International Journal of Health Care Finance and Economics, Springer, vol. 12(2), pages 145-162, June.
  5. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
  6. Alassane DRABO & Christian EBEKE, 2010. "Remittances, Public Health Spending and Foreign Aid in the Access to Health Care Services in Developing Countries," Working Papers 201004, CERDI.
  7. Patrick Guillaumont, 2011. "Aid effectiveness for poverty reduction:macroeconomic overview and emerging issues," Working Papers halshs-00554285, HAL.
  8. Brosio, Giorgio & Zanola, Roberto, 2008. "The welfare costs of national standards: a contribution to the debate on the outcomes of de/centralization," POLIS Working Papers 113, Institute of Public Policy and Public Choice - POLIS.
  9. Santiago Herrera & Gaobo Pang, 2006. "How Efficient is Public Spending in Education?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  10. Michele Capriati, 2011. "Public Expenditure and Human Development in the Italian Regions," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, June.
  11. Patrick GUILLAUMONT & Laurent WAGNER, 2014. "Aid effectiveness for poverty reduction: lessons from cross-country analyses, with a special focus on vulnerable countries," Working Papers P96, FERDI.
  12. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
  13. Kaushal, Kaushalendra Kumar & F Ram, Faujdar Ram & Abhishek, Abhishek Singh, 2013. "Public Spending on Health and Childhood Mortality in India," MPRA Paper 48680, University Library of Munich, Germany.
  14. Yusuke Kamiya, 2010. "Determinants of Health in Developing Countries:Cross-Country Evidence," OSIPP Discussion Paper 10E009, Osaka School of International Public Policy, Osaka University.
  15. Fan, Victoria Y. & Savedoff, William D., 2014. "The health financing transition: A conceptual framework and empirical evidence," Social Science & Medicine, Elsevier, vol. 105(C), pages 112-121.
  16. Craig Gallet, 2009. "The Determinants of AIDS Mortality: Evidence from a State-Level Panel," Atlantic Economic Journal, International Atlantic Economic Society, vol. 37(4), pages 425-436, December.
  17. Marwa Farag & A. Nandakumar & Stanley Wallack & Dominic Hodgkin & Gary Gaumer & Can Erbil, 2013. "Health expenditures, health outcomes and the role of good governance," International Journal of Health Care Finance and Economics, Springer, vol. 13(1), pages 33-52, March.

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