IDEAS home Printed from https://ideas.repec.org/p/ags/ubzefd/118422.html
   My bibliography  Save this paper

Determinants of Public Health expenditures in Pakistan

Author

Listed:
  • Abbas, Faisal
  • Hiemenz, Ulrich

Abstract

This study describes the macroeconomic determinants of health care spending in a broad context using time series data from Pakistan on economic, demographic, social, and political variables. The data spans a period from 1972- 2006 and was analyzed using cointegration and error correction approaches. All variables were found to be first difference stationary and the results confirm the presence of one cointegrating vector. This proves the existence of a long-run relationship between public health care expenditures and the other variables used in the model. The income elasticity of public health care expenditures is estimated at 0.23. As this value is less than unity it suggests that, contrary to most of the Organization for Economic Co-operation and Development (OECD) countries health care qualifies as a necessity in Pakistan. Urbanization and unemployment are variables that have a negative effect on health care expenditures, with elasticity values of -1.29 and –0.32 respectively, implying that it is costly to provide health care to residents of remote rural areas of Pakistan.

Suggested Citation

  • Abbas, Faisal & Hiemenz, Ulrich, 2011. "Determinants of Public Health expenditures in Pakistan," Discussion Papers 118422, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:118422
    DOI: 10.22004/ag.econ.118422
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/118422/files/DP158.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.118422?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    2. Albert Okunade & Mustafa Karakus, 2001. "Unit root and cointegration tests: timeseries versus panel estimates for international health expenditure models," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1131-1137.
    3. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    5. N.R. Murthy & Albert Okunade, 2000. "Managed care, deficit financing, and aggregate health care expenditure in the United States: A cointegration analysis," Health Care Management Science, Springer, vol. 3(4), pages 279-285, September.
    6. Dickey, David A & Pantula, Sastry G, 1987. "Determining the Ordering of Differencing in Autoregressive Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 455-461, October.
    7. Alistair McGuire & David Parkin & David Hughes & Karen Gerard, 1993. "Econometric analyses of national health expenditures: Can positive economics help to answer normative questions?," Health Economics, John Wiley & Sons, Ltd., vol. 2(2), pages 113-126, July.
    8. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    9. Rehana Siddiqui & Usman Afridi & Rashida Haq, 1995. "Determinants of Expenditure on Health in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 959-970.
    10. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    11. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
    12. Blomqvist, A. G. & Carter, R. A. L., 1997. "Is health care really a luxury?," Journal of Health Economics, Elsevier, vol. 16(2), pages 207-229, April.
    13. Darryl Holden & Roger Perman, 1994. "Unit Roots and Cointegration for the Economist," Palgrave Macmillan Books, in: B. Bhaskara Rao (ed.), Cointegration, chapter 3, pages 47-112, Palgrave Macmillan.
    14. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September.
    15. repec:bla:econom:v:47:y:1980:i:188:p:387-406 is not listed on IDEAS
    16. A.R. Kemal, 1994. "Structural Adjustment, Employment, Income Distribution and Poverty," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 33(4), pages 901-914.
    17. Michael Grossman, 1972. "A Stock Approach to the Demand for Health," NBER Chapters, in: The Demand for Health: A Theoretical and Empirical Investigation, pages 1-10, National Bureau of Economic Research, Inc.
    18. Pedro Pita Barros, 1998. "The black box of health care expenditure growth determinants," Health Economics, John Wiley & Sons, Ltd., vol. 7(6), pages 533-544, September.
    19. Amar A Hamoudi & Jeffrey D. Sachs, 1999. "Economic Consequences of Health Status: A Review of the Evidence," CID Working Papers 30A, Center for International Development at Harvard University.
    20. Joan Costa‐Font & Marin Gemmill & Gloria Rubert, 2011. "Biases in the healthcare luxury good hypothesis?: a meta‐regression analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(1), pages 95-107, January.
    21. Wolfe, Barbara L., 1986. "Health status and medical expenditures: Is there a link?," Social Science & Medicine, Elsevier, vol. 22(10), pages 993-999, January.
    22. Cutler, David M, 1995. "The Cost and Financing of Health Care," American Economic Review, American Economic Association, vol. 85(2), pages 32-37, May.
    23. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May.
    24. Amar A. Hamoudi & Jeffrey D. Sachs, 1999. "Economic Consequences of Health Status: A Review of the Evidence," CID Working Papers 30, Center for International Development at Harvard University.
    25. Judge, Ken & Mulligan, Jo-Ann & Benzeval, Michaela, 0. "Income inequality and population health," Social Science & Medicine, Elsevier, vol. 46(4-5), pages 567-579, February.
    26. Joseph P. Newhouse, 1977. "Medical-Care Expenditure: A Cross-National Survey," Journal of Human Resources, University of Wisconsin Press, vol. 12(1), pages 115-125.
    27. Schultz, T. Paul, 2004. "Health economics and applications in developing countries," Journal of Health Economics, Elsevier, vol. 23(4), pages 637-641, July.
    28. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anam Javaid & Anam Javaid & Muhammad Waheed, 2019. "Statistical Analysis of Basic Necessities and Facilities Related to Human Development Index," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 6(2), pages 39-44.
    2. Usman Shakoor & Mudassar Rashid & Ashfaque Ali Baloch & Muhammad Iftikhar ul Husnain & Abdul Saboor, 2021. "How Aging Population Affects Health Care Expenditures in Pakistan? A Bayesian VAR Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(2), pages 585-607, January.
    3. Tuğay GÜNEL, 2018. "The Relationship Between Young Populations, Life Expectancy at Birth, Number Of Doctors and Health Expenditure in Turkey: An Econometric Application," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 1.
    4. Olayiwola, Saheed O. & Bakare-Aremu, Tunde Abubakar & Abiodun, S.O., 2021. "Public Health Expenditure and Economic Growth in Nigeria: Testing of Wagner's Hypothesis," African Journal of Economic Review, African Journal of Economic Review, vol. 9(2), April.
    5. Nawaz, Saima, 2021. "Energy poverty, climate shocks, and health deprivations," Energy Economics, Elsevier, vol. 100(C).
    6. Edit V. Velenyi & Marc F. Smitz, 2014. "Cyclical Patterns in Government Health Expenditures Between 1995 and 2010," Health, Nutrition and Population (HNP) Discussion Paper Series 87885, The World Bank.
    7. Glenn P. Jenkins & Hope Amala Anyabolu & Pejman Bahramian, 2019. "Family Decision Making on Healthcare Spending: New Evidence for Nigeria," Development Discussion Papers 2019-12, JDI Executive Programs.
    8. Byaro, Mwoya & Kinyondo, Abel & Michello, Charles & Musonda, Patrick, 2018. "Determinants of Public Health Expenditure Growth in Tanzania: An Application of Bayesian Model," African Journal of Economic Review, African Journal of Economic Review, vol. 6(1), January.
    9. M. M. Fasoranti, 2015. "An Econometric Analysis of the Determinants of Government Health Expenditures in Nigeria," Journal of Empirical Economics, Research Academy of Social Sciences, vol. 4(4), pages 193-206.
    10. Anam Javaid & Atif Akbar & Shahbaz Nawaz, 2018. "A Review on Human Development Index," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(3), pages :357-369, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Faisal Abbas & Ulrich Hiemenz, 2013. "What determines public health expenditures in Pakistan? Role of income, urbanization and unemployment," Economic Change and Restructuring, Springer, vol. 46(4), pages 341-362, November.
    2. Tang, Chor Foon, 2011. "Multivariate Granger Causality and the Dynamic Relationship between Health Care Spending, Income and Relative Price of Health Care in Malaysia," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(2), pages 199-214, December.
    3. Muhammad Arshad Khan & Muhammad Iftikhar Ul Husnain, 2019. "Is health care a luxury or necessity good? Evidence from Asian countries," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 213-233, June.
    4. Badi H. Baltagi & Raffaele Lagravinese & Francesco Moscone & Elisa Tosetti, 2017. "Health Care Expenditure and Income: A Global Perspective," Health Economics, John Wiley & Sons, Ltd., vol. 26(7), pages 863-874, July.
    5. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    6. Tang, Chor Foon, 2010. "The determinants of health expenditure in Malaysia: A time series analysis," MPRA Paper 24356, University Library of Munich, Germany.
    7. Faisal Abbas & Haroon Sarwar Awan, 2018. "What Determines Health Status of Population in Pakistan?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(1), pages 1-23, August.
    8. Seher Sülkü & Asena Caner, 2011. "Health care expenditures and gross domestic product: the Turkish case," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(1), pages 29-38, February.
    9. Moheddine Younsi & Marwa Bechtini & Mongi Lassoued, 2024. "The relationship between insurance development, population, economic growth, and health expenditures in OECD countries: a panel causality analysis," Future Business Journal, Springer, vol. 10(1), pages 1-19, December.
    10. Di Matteo, Livio, 2005. "The macro determinants of health expenditure in the United States and Canada: assessing the impact of income, age distribution and time," Health Policy, Elsevier, vol. 71(1), pages 23-42, January.
    11. Yan Feng & Toby Watt & Anita Charlesworth & Grace Marsden & Adam Roberts & Jon Sussex, 2017. "What Determines the Health Care Expenditure of High Income Countries? A Dynamic Estimation," Applied Economics and Finance, Redfame publishing, vol. 4(6), pages 1-16, November.
    12. Joan Costa‐Font & Marin Gemmill & Gloria Rubert, 2011. "Biases in the healthcare luxury good hypothesis?: a meta‐regression analysis," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 174(1), pages 95-107, January.
    13. Marwa Farag & A. NandaKumar & Stanley Wallack & Dominic Hodgkin & Gary Gaumer & Can Erbil, 2012. "The income elasticity of health care spending in developing and developed countries," International Journal of Health Economics and Management, Springer, vol. 12(2), pages 145-162, June.
    14. Mocan, H. Naci & Tekin, Erdal & Zax, Jeffrey S., 2004. "The Demand for Medical Care in Urban China," World Development, Elsevier, vol. 32(2), pages 289-304, February.
    15. Jennifer Roberts, 1999. "Sensitivity of elasticity estimates for OECD health care spending: analysis of a dynamic heterogeneous data field," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 459-472, August.
    16. Mark Berger & Jodi Messer, 2002. "Public financing of health expenditures, insurance, and health outcomes," Applied Economics, Taylor & Francis Journals, vol. 34(17), pages 2105-2113.
    17. Albert Okunade & Mustafa Karakus, 2001. "Unit root and cointegration tests: timeseries versus panel estimates for international health expenditure models," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1131-1137.
    18. Silvia Fedeli, 2015. "The Impact of GDP on Health Care Expenditure: The Case of Italy (1982–2009)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(2), pages 347-370, June.
    19. DO ANGO, Simplicio & AMBA OYON, Claude Marius, 2016. "Health expenditure and Real disposable Income in the ECCAS: A Causal Study using spatial panel approach," MPRA Paper 79684, University Library of Munich, Germany.
    20. Gerdtham, Ulf-G. & Löthgren, Mickael, 1998. "International Health Expenditure and GDP: New Multivariate Cointegration Panel Data Results," SSE/EFI Working Paper Series in Economics and Finance 258, Stockholm School of Economics.

    More about this item

    Keywords

    Health Economics and Policy;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:ubzefd:118422. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/zefbnde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.