Government response to increased demand for public services:: the cyclicality of government health expenditures in the OECD

Andrew Abbott; Philip Jones

doi:10.1016/j.ejpoleco.2020.101988

Government response to increased demand for public services: the cyclicality of government health expenditures in the OECD

Andrew Abbott, Philip Jones

University of Hull

Research output: Contribution to journal › Article › peer-review

8 Citations (SciVal)

98 Downloads (Pure)

Abstract

The more that health care expenditures are financed by general taxation, the greater the discretion governments are likely to exercise when timing increases in health care expenditures. Vote-maximising governments time increases in health care expenditures to occur in economic upturns, when voters are not as aware of the required increase in taxation. In recessions, they have an incentive to sustain expenditures on health care by diverting expenditures from other public expenditure programmes that voters perceive as low priority. In this way, government pursuit of a political agenda is likely to exert a systematic influence on the cyclicality of government expenditure. Predictions are tested with reference to the cyclicality of government health expenditures, for a sample of OECD countries from 2000 to 2012.

Original language	English
Article number	101988
Journal	European Journal of Political Economy
Volume	68
Early online date	5 Dec 2020
DOIs	https://doi.org/10.1016/j.ejpoleco.2020.101988
Publication status	Published - 30 Jun 2021

Funding

The authors wish to acknowledge the helpful comments and encouragement from the Editor, three anonymous reviewers and Richard Wagner. Of course, the usual disclaimer applies. If there are any errors, they are the sole responsibility of the authors.

Keywords

Business cycles
Fiscal illusion
Health care
Voracity effects

ASJC Scopus subject areas

Economics and Econometrics
Political Science and International Relations

Access to Document

10.1016/j.ejpoleco.2020.101988

Cyclical Health Care 20_Oct_2020Accepted author manuscript, 626 KBLicence: CC BY-NC-ND

Cite this

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title = "Government response to increased demand for public services:: the cyclicality of government health expenditures in the OECD ",

abstract = "The more that health care expenditures are financed by general taxation, the greater the discretion governments are likely to exercise when timing increases in health care expenditures. Vote-maximising governments time increases in health care expenditures to occur in economic upturns, when voters are not as aware of the required increase in taxation. In recessions, they have an incentive to sustain expenditures on health care by diverting expenditures from other public expenditure programmes that voters perceive as low priority. In this way, government pursuit of a political agenda is likely to exert a systematic influence on the cyclicality of government expenditure. Predictions are tested with reference to the cyclicality of government health expenditures, for a sample of OECD countries from 2000 to 2012.",

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