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Strategic interaction and the determinants of public health expenditures in China: a spatial panel perspective

  • Yihua Yu
  • Li Zhang
  • Fanghua Li
  • Xinye Zheng


This paper examines determinants of expenditures on public health in China using a panel of 31 Chinese provinces covering the period 1997–2008. In particular, we propose a spatial Durbin panel model with spatial and time-period fixed effects to test whether China’s provinces incorporate the neighbor’s health spending behavior into their own decision making. We mainly find that a provincial government appears to decrease its own health spending as a response to the rise of health spending of its neighboring provinces, supportive of the expenditure externality hypothesis. Important policy implications are drawn. Copyright Springer-Verlag 2013

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Article provided by Springer & Western Regional Science Association in its journal The Annals of Regional Science.

Volume (Year): 50 (2013)
Issue (Month): 1 (February)
Pages: 203-221

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Handle: RePEc:spr:anresc:v:50:y:2013:i:1:p:203-221
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