ABSTRACT
We study the dynamic response of output to a shock to government health spending. The shock (i) leads to an immediate and persistent rise in output and (ii) has a sizable explanatory power for the long-run variation in output. These findings suggest that the output effects of health spending are propagated in a ‘time-release’ fashion.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 These data come from the World Development Indicators database provided by the World Bank (https://databank.worldbank.org/source/world-development-indicators).
2 National Center for Health Statistics (https://www.cdc.gov/nchs/fastats/older-american-health.htm) and Verbrugge (Citation1984): https://www.jstor.org/stable/pdf/3349861.pdf.
3 Institute for Health Metrics and Evaluation (http://ghdx.healthdata.org/gbd-results-tool?params=gbd-api-2017-permalink/3c0ee862905ade1c81d9dba0447a18c6).
4 Jakovljevic, Getzen, and Jakovljevic (Citation2016), Jakovljevic et al. (Citation2021a), and Jakovljevic et al. (Citation2022) find that health spending has generally been on the rise globally.
5 Evidence of a link between health spending and GDP growth in the U.S. and other countries has been documented by Jakovljevic et al. (Citation2020), and Jakovljevic et al. (Citation2021b).
6 does not contain an subscript because variables in it are invariant across states.
7 That is, the additional dollar increase in output from an extra dollar increase in public health spending.
8 In our sample, and .
9 Output responses to shocks to the other variables not shown because they are not surprising. See Atems and Blankenau (Citation2022) for those responses and discussion.