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Strategic interaction and the determinants of public health expenditures in China: a spatial panel perspective

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Abstract

This paper examines determinants of expenditures on public health in China using a panel of 31 Chinese provinces covering the period 1997–2008. In particular, we propose a spatial Durbin panel model with spatial and time-period fixed effects to test whether China’s provinces incorporate the neighbor’s health spending behavior into their own decision making. We mainly find that a provincial government appears to decrease its own health spending as a response to the rise of health spending of its neighboring provinces, supportive of the expenditure externality hypothesis. Important policy implications are drawn.

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Authors and Affiliations

  1. School of Economics, Renmin University of China, Beijing, China

    Yihua Yu, Fanghua Li & Xinye Zheng

  2. China Academy of Public Finance and Public Policy, Central University of Finance and Economy, Beijing, China

    Li Zhang

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  1. Yihua Yu
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  2. Li Zhang
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  3. Fanghua Li
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Correspondence to Xinye Zheng.

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Yu, Y., Zhang, L., Li, F. et al. Strategic interaction and the determinants of public health expenditures in China: a spatial panel perspective. Ann Reg Sci 50, 203–221 (2013). https://doi.org/10.1007/s00168-011-0488-7

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  • DOI: https://doi.org/10.1007/s00168-011-0488-7

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