Does investment in the health sector promote or inhibit economic growth?

Reeves, Aaron; Basu, Sanjay; McKee, Martin; Meissner, Christopher; Stuckler, David

doi:10.1186/1744-8603-9-43

Globalization and Health

Table 2 Estimated fiscal multipliers, adjusted for unemployment rates, interest rates, trade balance (net exports), and domestic investment

From: Does investment in the health sector promote or inhibit economic growth?

a. Fiscal multiplier for total government spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total government spending	1.61**	1.60**	1.38**	1.10**	0.64**
	(0.12)	(0.15)	(0.17)	(0.10)	(0.13)
Unemployment rate	—	−248.28**	−258.67**	−364.58**	−205.14
		(65.84)	(86.17)	(94.99)	(131.78)
Interest rate	—	—	−320.26**	−304.69**	−269.42**
			(94.24)	(76.57)	(54.26)
Net exports (PPP, Real, per capita)	—	—	—	0.61**	1.31**
				(0.16)	(0.19)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.12**
					(0.26)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
b. Fiscal multiplier for health spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total health spending	4.32**	3.21**	2.07	2.23*	1.92**
	(0.88)	(0.98)	(1.21)	(0.90)	(0.53)
Total government spending minus health spending	1.05**	1.26**	1.25**	0.88**	0.39*
	(0.33)	(0.37)	(0.39)	(0.27)	(0.15)
Unemployment rate	—	−205.61**	−239.03*	−336.54**	−173.88
		(57.89)	(87.57)	(94.16)	(123.10)
Interest rate	—	—	−286.44**	−248.57**	−203.53**
			(83.05)	(58.98)	(47.45)
Net exports (PPP, Real, per capita)	—	—	—	0.64**	1.24**
				(0.17)	(0.17)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.06**
					(0.25)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
c. Fiscal multiplier for defense spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total defense spending	−9.83**	−13.17**	−12.92**	−8.51	−3.62
Total defense spending	(3.32)	(3.67)	(4.33)	(4.77)	(2.91)
Total government spending minus defense spending	1.66**	1.62**	1.42**	1.20**	0.71**
Total government spending minus defense spending	(0.08)	(0.09)	(0.10)	(0.11)	(0.14)
Unemployment rate	—	−286.58**	−301.73**	−368.95**	−221.27
		(66.15)	(90.73)	(91.27)	(124.46)
Interest rate	—	—	−253.31*	−263.02**	−251.73**
			(96.90)	(84.62)	(55.96)
Net exports (PPP, Real, per capita)	—	—	—	0.47*	1.24**
				(0.20)	(0.18)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.08**
					(0.25)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
d. Fiscal multiplier for education spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total education spending	8.24**	6.53**	4.98	5.06**	3.16*
	(2.09)	(2.10)	(2.50)	(1.75)	(1.11)
Total government spending minus education spending	0.66*	0.88**	0.92**	0.59**	0.33
Total government spending minus education spending	(0.24)	(0.26)	(0.27)	(0.20)	(0.24)
Unemployment rate	—	−188.09**	−227.19**	−333.20**	−168.63
		(58.30)	(76.03)	(84.09)	(117.61)
Interest rate	—	—	−211.45	−184.21	−186.19**
			(127.38)	(97.00)	(61.05)
Net exports (PPP, Real, per capita)	—	—	—	0.63**	1.26**
				(0.15)	(0.17)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.11**
					(0.22)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
e. Fiscal multiplier for general public services spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total general public services spending	0.62	1.37	2.44*	2.05*	0.81
Total general public services spending	(0.68)	(0.71)	(0.89)	(0.88)	(0.58)
Total government spending minus general public services spending	1.75**	1.63**	1.21**	0.96**	0.62**
	(0.09)	(0.12)	(0.14)	(0.14)	(0.11)
Unemployment rate	—	−242.48**	−279.25**	−381.55**	−207.43
		(67.58)	(88.70)	(100.42)	(132.83)
Interest rate	—	—	−396.26**	−372.92**	−284.09**
			(97.04)	(84.44)	(59.63)
Net exports (PPP, Real, per capita)	—	—	—	0.60**	1.30**
				(0.16)	(0.19)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.12**
					(0.27)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
f. Fiscal multiplier for culture & recreation spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total culture & recreation spending	7.57	6.25	4.52	0.83	3.19
Total culture & recreation spending	(5.51)	(4.70)	(3.99)	(2.96)	(3.25)
Total government spending minus culture & recreation spending	1.34**	1.38**	1.24**	1.11**	0.57**
	(0.32)	(0.30)	(0.26)	(0.19)	(0.18)
Unemployment rate	—	−243.28**	−259.08**	−365.32**	−194.27
		(65.52)	(88.99)	(94.63)	(129.50)
Interest rate	—	—	−306.23**	−305.79**	−258.23**
			(98.71)	(77.59)	(54.23)
Net exports (PPP, Real, per capita)	—	—	—	0.61**	1.31**
				(0.16)	(0.18)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.14**
					(0.26)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
g. Fiscal multiplier for community spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total community spending	−2.50**	−2.32**	−1.57**	−0.91	−0.48
Total community spending	(0.79)	(0.63)	(0.52)	(0.63)	(0.58)
Total government spending minus community spending	1.68**	1.67**	1.47**	1.19**	0.73**
Total government spending minus community spending	(0.10)	(0.13)	(0.15)	(0.09)	(0.11)
Unemployment rate	—	−231.99**	−255.56**	−351.38**	−198.19
		(58.31)	(85.00)	(90.87)	(129.65)
Interest rate	—	—	−254.50**	−260.82**	−248.63**
			(80.86)	(69.72)	(49.31)
Net exports (PPP, Real, per capita)	—	—	—	0.55**	1.22**
				(0.14)	(0.19)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.03**
					(0.28)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
h. Fiscal multiplier for environment spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total environment spending	8.39	1.03	−0.46	3.02	3.54
Total environment spending	(5.92)	(4.73)	(4.01)	(4.02)	(2.67)
Total government spending minus environment spending	1.50**	1.60**	1.40**	1.07**	0.59**
Total government spending minus environment spending	(0.17)	(0.16)	(0.18)	(0.14)	(0.14)
Unemployment rate	—	−251.28**	−269.12**	−356.05**	−193.58
		(67.63)	(86.71)	(96.24)	(128.60)
Interest rate	—	—	−322.65**	−301.83**	−261.57**
			(94.54)	(78.69)	(56.92)
Net exports (PPP, Real, per capita)	—	—	—	0.62**	1.35**
				(0.16)	(0.18)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	1.14**
					(0.26)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
i. Fiscal multiplier for economic affairs spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total economic affairs spending	0.06	−0.06	0.03	−0.55	−0.29
Total economic affairs spending	(0.38)	(0.45)	(0.40)	(0.35)	(0.28)
Total government spending minus economic affairs spending	1.83**	1.80**	1.58**	1.32**	0.84**
Total government spending minus economic affairs spending	(0.14)	(0.17)	(0.20)	(0.14)	(0.19)
Unemployment rate	—	−248.83**	−271.11**	−388.53**	−233.36
		(62.40)	(75.94)	(84.40)	(125.08)
Interest rate	—	—	−265.45**	−237.34**	−238.72**
			(91.29)	(74.14)	(50.65)
Net exports (PPP, Real, per capita)	—	—	—	0.66**	1.27**
				(0.13)	(0.18)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	0.97**
					(0.26)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19
j. Fiscal multiplier for social protection spending
	Gross domestic product adjusted for inflation and purchasing-power parity
Covariates	(1)	(2)	(3)	(4)	(5)
Total social protection spending	2.88**	3.25**	2.72**	2.21**	1.29*
Total social protection spending	(0.45)	(0.49)	(0.64)	(0.49)	(0.53)
Total government spending minus social protection spending	0.83**	0.52	0.57	0.47*	0.36
Total government spending minus social protection spending	(0.27)	(0.26)	(0.31)	(0.20)	(0.20)
Unemployment rate	—	−289.73**	−323.90**	−410.46**	−254.49
		(61.01)	(85.98)	(94.19)	(142.36)
Interest rate	—	—	−211.82	−217.75*	−229.26**
			(101.48)	(80.13)	(59.17)
Net exports (PPP, Real, per capita)	—	—	—	0.57**	1.28**
				(0.17)	(0.21)
Total domestic investment (PPP, Real, per capita)	—	—	—	—	0.98**
					(0.31)
Country-years	296	213	213	213	192
Number of countries	25	19	19	19	19

Notes: Robust standard errors in parentheses clustered by country to reflect non-independence of sampling.
** p<0.01, * p<0.05.

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