Fiscal capacity and public health expenditure in Zimbabwe

Figures & data

Figure 1. Trends in fiscal capacity and public health expenditure.

Sources: Author based on Dhliwayo (2001), Munyuki and Jasi (2009), and Mansour (2014); COMESA (Common Market for Eastern and Southern Africa (COMESA), 2020, International Monetary Fund (IMF; 2021), and World Bank (WB; 2021).

Table 1. Summary statistics

Variable	Description	Obs	Mean	SD	Min	Max
PHE	Public health expenditure (% of GDP)	38	2.63	1.07	0.4	6.03
REV	Tax revenue to GDP ratio (%)	38	19.45	6.69	1.98	35.4
GDP	GDP (local currency unit, millions)	38	14,857.37	2940.25	9582.74	19,187.85
URB	Urban population (% of total population)	38	30.71	3.70	22.37	34.59
DEBT	External debt stocks (% of GNI)	38	59.0	26.41	12.03	147.04
AGE	Ratio of population aged 65 years and older to the working age population (15–64 years)	38	5.45	0.17	5.18	5.69
GGCE	General government final consumption expenditure (% of GDP)	38	17.44	5.12	2.04	27.49

Table 2. Results of ADF and PP unit root tests

Variable	ADF test statistics		PP test statistics
	Levels	First differences	Levels	First differences
lnPHE	−3.5445**	−5.1649***	−2.1143	−5.7700***
lnREV	−3.2648**	−4.8551***	−2.5234	−4.3738***
lnGDP	−2.8012	−3.9291***	−1.9038	−3.9343***
lnURB	−3.1082***		−4.1295***
lnDEBT	−3.5956**	−4.7522***	−3.5404**	−4.6675***
lnAGE	−4.2514***		−1.7655	−2.1326**
lnGGCE	−2.9270	−4.6207***	−2.4058	−5.5793***

Asterisks show levels of significance (***p < 0.01; ** p < 0.05).

Table 3. Results of ZA structural break unit root tests

Variable	Levels		First differences
	Break date	t-statistic	Break date	t-statistic
lnPHE	2005	−5.2638**	2009	−7.3071***
lnREV	2005	−4.8878	2009	−6.5318***
lnGDP	2002	−4.0799	2009	−6.3477***
lnURB	2003	−5.6864***
lnDEBT	2009	−5.9047***
lnAGE	1996	−3.6453	2009	−5.4151***
lnGGCE	2011	−3.6863	2009	−6.8182***

Asterisks show levels of significance (***p < 0.01; ** p < 0.05).

Table 4. Results of Gregory-Hansen cointegration testing with structural breaks

Break specification	ADF statistic	Critical value		Decision
		1%	5%
Level (C)	−5.45	−6.05	−5.56	Do not reject Ho
Trend (C/T)	−5.34	−6.36	−5.83	Do not reject Ho
Regime (C/S)	−5.25	−6.92	−6.41	Do not reject Ho

Table 5. ARDL bounds cointegration testing results

F-statistic	Lower bound; I(0)	Upper bound; I(1)	Significance level	Outcome
5.4191	2.26	3.35	10%	Cointegrated
	2.62	3.79	5%
	3.41	4.68	1%

Table 6. Long-run ARDL (2, 1, 2, 0, 1, 0) model results

Variable	Coefficient	Standard error	t-statistic	p-value
lnREV	0.2823	0.1287	2.1939	0.0382**
lnGDP	1.9444	0.4878	3.9858	0.0005***
lnURB	−2.1348	1.0842	−1.9689	0.0606
lnDEBT	0.1424	0.2686	0.5302	0.6009
lnAGE	0.1451	1.8376	0.0790	0.9377

Asterisks show levels of significance (***p < 0.01; ** p < 0.05).

Table 7. Short-run ARDL (2, 1, 2, 0, 1, 0) cointegrating Error Correction Model results

Variable	Coefficient	Standard error	t-statistic	p-value
∆lnPHEt-1	0.4784	0.0912	5.2450	0.0000***
∆lnREV	0.3548	0.0683	5.1945	0.0000***
∆lnGDP	1.1875	0.4557	2.6057	0.0155**
∆lnGDPt-1	−1.7542	0.3944	−4.4479	0.0002***
∆lnDEBT	−0.2612	0.1603	−1.6294	0.1163
Constant	−8.7857	1.4074	−6.2426	0.0000***
ECTt-1	−0.7297	0.1164	−6.2680	0.0000***
R-squared: 0.8793 Adjusted R^2: 0.8544 Wald F-statistic: 35.2206 (p = 0.0000) Observations: 36

Asterisks show levels of significance (***p < 0.01; (**p < 0.05).

Table 8. Summary of diagnostic tests

Autocorrelation	Heteroscedasticity	Normality	Specification	Multicollinearity
F = 0.6314 (0.5412)	F = 1.6415 (0.1498)	JB = 0.6686 (0.7158)	F = 0.2228 (0.6416)	Highest VIF = 8.0471

Figure 2. Cumulative sum of recursive residuals (CUSUM).

Figure 3. Cumulative sum of squared recursive residuals (CUSUMsq).

Table 9. Regression results of FMOLS and CCR

Variable	FMOLS	CCR
lnREV	0.4911*** (0.0981)	0.4741*** (0.1094)
lnGDP	1.0990** (0.4338)	1.2415** (0.5087)
lnURB	−0.2062 (0.9039)	−0.3761 (0.9503)
lnDEBT	−0.0758 (0.2237)	−0.0404 (0.2060)
lnAGE	0.7913 (1.8991)	1.1153 (1.9657)
Constant	−11.4050 (5.6957)	−12.8336 (6.2098)**
R-squared Adjusted R^2 Observations	0.7951 0.7621 37	0.7938 0.7605 37

Standard errors are shown in parentheses.

Significance levels are shown by asterisks (***p < 0.01, **p < 0.05).

Table 10. Regression results with GGCE as the proxy for fiscal capacity

Variable	ARDL	FMOLS	CCR
lnGGCE	0.2058 (0.1626)	0.5856*** (0.1201)	0.5772*** (0.1290)
lnGDP	2.0508*** (0.4580)	1.1974*** (0.4231)	1.2560** (0.4830)
lnURB	−1.8738 (0.9234)	−0.7694 (0.8902)	−0.8394 (0.9111)
lnDEBT	0.0511 (0.2859)	0.1158 (0.2341)	0.1318 (0.2066)
lnAGE	0.3201 (1.9462)	1.5632 (1.8946)	1.6711 (1.9381)
Constant	−10.1451*** (1.5800)	−12.7221** (5.6490)	−13.2705** (6.0376)
R-squared Adjusted R^2 Observations	0.8582 0.8346 36	0.7608 0.7223 37	0.7610 0.7224 37

Standard errors are shown in parentheses.

Significance levels are shown by asterisks (***p < 0.01, **p < 0.05).

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