The cyclical behaviour of public and private health expenditure in China

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Abstract

This paper studies short-run cyclical behaviour of public (government and social) and private health expenditure and GDP using both time series and panel data techniques. First, national time series data have been used within a multivariate Beveridge-Nelson decomposition framework to construct the permanent and cyclical components. The correlation analysis results for the cyclical components suggest that current public health expenditure is pro-cyclical while there is no clear evidence of a correlation between cycles in private health expenditure and in GDP growth. Next, using an instrumental variable method and the generalised method of moments estimator, provincial-level panel data analyses confirm pro-cyclical impacts of government spending on health. The provincial analysis also suggests that private health expenditure in urban China has a pro-cyclical association with GDP growth, but a lack of good instruments makes it difficult to identify a clear causal link between cycles in income growth and private health expenditure. The results suggest two policy recommendations relevant to public health expenditure, in line with China s current health reforms.
Original languageEnglish
Pages (from-to)1071 - 1092
Number of pages22
JournalHealth Economics
Volume22
Issue number9
DOIs
Publication statusPublished - 2013

Cite this

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title = "The cyclical behaviour of public and private health expenditure in China",
abstract = "This paper studies short-run cyclical behaviour of public (government and social) and private health expenditure and GDP using both time series and panel data techniques. First, national time series data have been used within a multivariate Beveridge-Nelson decomposition framework to construct the permanent and cyclical components. The correlation analysis results for the cyclical components suggest that current public health expenditure is pro-cyclical while there is no clear evidence of a correlation between cycles in private health expenditure and in GDP growth. Next, using an instrumental variable method and the generalised method of moments estimator, provincial-level panel data analyses confirm pro-cyclical impacts of government spending on health. The provincial analysis also suggests that private health expenditure in urban China has a pro-cyclical association with GDP growth, but a lack of good instruments makes it difficult to identify a clear causal link between cycles in income growth and private health expenditure. The results suggest two policy recommendations relevant to public health expenditure, in line with China s current health reforms.",
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The cyclical behaviour of public and private health expenditure in China. / Chen, Gang; Inder, Brett Andrew; Lorgelly, Paula Kate; Hollingsworth, Bruce Phillip.

In: Health Economics, Vol. 22, No. 9, 2013, p. 1071 - 1092.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - The cyclical behaviour of public and private health expenditure in China

AU - Chen, Gang

AU - Inder, Brett Andrew

AU - Lorgelly, Paula Kate

AU - Hollingsworth, Bruce Phillip

PY - 2013

Y1 - 2013

N2 - This paper studies short-run cyclical behaviour of public (government and social) and private health expenditure and GDP using both time series and panel data techniques. First, national time series data have been used within a multivariate Beveridge-Nelson decomposition framework to construct the permanent and cyclical components. The correlation analysis results for the cyclical components suggest that current public health expenditure is pro-cyclical while there is no clear evidence of a correlation between cycles in private health expenditure and in GDP growth. Next, using an instrumental variable method and the generalised method of moments estimator, provincial-level panel data analyses confirm pro-cyclical impacts of government spending on health. The provincial analysis also suggests that private health expenditure in urban China has a pro-cyclical association with GDP growth, but a lack of good instruments makes it difficult to identify a clear causal link between cycles in income growth and private health expenditure. The results suggest two policy recommendations relevant to public health expenditure, in line with China s current health reforms.

AB - This paper studies short-run cyclical behaviour of public (government and social) and private health expenditure and GDP using both time series and panel data techniques. First, national time series data have been used within a multivariate Beveridge-Nelson decomposition framework to construct the permanent and cyclical components. The correlation analysis results for the cyclical components suggest that current public health expenditure is pro-cyclical while there is no clear evidence of a correlation between cycles in private health expenditure and in GDP growth. Next, using an instrumental variable method and the generalised method of moments estimator, provincial-level panel data analyses confirm pro-cyclical impacts of government spending on health. The provincial analysis also suggests that private health expenditure in urban China has a pro-cyclical association with GDP growth, but a lack of good instruments makes it difficult to identify a clear causal link between cycles in income growth and private health expenditure. The results suggest two policy recommendations relevant to public health expenditure, in line with China s current health reforms.

U2 - 10.1002/hec.2957

DO - 10.1002/hec.2957

M3 - Article

VL - 22

SP - 1071

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JO - Health Economics

JF - Health Economics

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