Health and the macroeconomy: research to support "more money for health" policies in Central America

Authors: Rodrigo Moreno Serra, Paulo Santos Monteiro, and Willis Ruiz Marin

Abstract: Using a -PVAR- Panel Vector Autoregressive methodology, we study how structural shocks affect health and macroeconomic variables in the short run in eight Central American countries: Belize, Costa Rica, Dominican Republic, Guatemala, El Salvador, Honduras, Nicaragua, and Panama. Health expenditure, government expenditure, and GDP growth shocks are analysed, along with their effects on the demand and supply of healthcare at a granular level. The preliminary results show that over 5 years, an increase in the proportion of public spending devoted to health is associated with a smaller, but positive, impact on the GDP growth rate. In addition, an increase in health spending as a proportion of public spending does not appear to affect the growth rate of total public spending and does not crowd out fiscal space.