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The effects of health spending on the propagation of infectious diseases

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  • Marcelo Castro
  • Enlinson Mattos
  • Fernanda Patriota

Abstract

We explore the discontinuity in the allocation of the main federal grant to Brazilian municipalities to identify the local effects of health spending and the spillovers into the bordering jurisdictions. Fiscal reactions are asymmetric: small neighbors reduce health spending, while we do not find a significant budgetary response in the largest neighbor. Our results suggest a reduction in the spread of infectious diseases in the neighbors, with fewer residents hospitalized with gastrointestinal infections. In addition, the elderly demand less hospitalization in the largest bordering jurisdictions due to respiratory infectious diseases. Finally, we find a direct and significant reduction in infant mortality, consistent with the observed pediatricians' increase, while the spillover effects on neighbors' mortality rates are not conclusive.

Suggested Citation

  • Marcelo Castro & Enlinson Mattos & Fernanda Patriota, 2021. "The effects of health spending on the propagation of infectious diseases," Health Economics, John Wiley & Sons, Ltd., vol. 30(10), pages 2323-2344, September.
    • Handle: RePEc:wly:hlthec:v:30:y:2021:i:10:p:2323-2344
    DOI: 10.1002/hec.4388
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