Does Economic Policy Uncertainty Matter for Healthcare Expenditure in China? A Spatial Econometric Analysis

Abstract

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A growing body of research has documented the determinants of healthcare expenditure, but no known empirical research has focused on investigating the spatial effects between economic policy uncertainty (EPU) and healthcare expenditure. This study aims to explore the spatial effects of EPU on healthcare expenditure using the panel data of 29 regions in China from 2007 to 2017. Our findings show that healthcare expenditure in China has the characteristics of spatial clustering and spatial spillover effects. Our study also shows that EPU has positive spatial spillover effects on healthcare expenditure in China; that is, EPU affects not only local healthcare expenditure but also that in other geographically close or economically connected regions. Our study further indicates that the spatial spillover effects of EPU on healthcare expenditure only exist in the eastern area. The findings of this research provide some key implications for policymakers in emerging markets.

Keywords

• economic policy uncertainty
• healthcare expenditures
• spatial spillover effects
• spatial Durbin model
• regional heterogeneity