ArticleHealth economics2019
Pharmaceutical expenditure and gross domestic product: Evidence of simultaneous effects using a two-step instrumental variables strategy.
Article in Health economics, 2019. The graph could read no effect estimate from its abstract, so it casts no vote on the map. Cited by 7 papers.
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Who cites it
7 citing papers in PubMed.
- The association between drug shortages and prices across 74 countries: uncovering global access inequities.BMJ global health · 2025Article
- Trump's Drug Pricing Order and the Domestic Economic Trade-Off.Applied health economics and health policy · 2025Article
- The relationship between public health expenditure and urban economic resilience.Frontiers in public health · 2025Article
- Off‑label and unapproved pediatric drug utilization: A meta‑analysis.Experimental and therapeutic medicine · 2024Article
- Exploring the effectiveness of demand-side retail pharmaceutical expenditure reforms : Cross-country evidence from weighted-average least squares estimation.International journal of health economics and management · 2023Article
- Investigation the determinants of pharmaceutical expenditure share of GDP in Iran and selected OECD countries.Journal of pharmaceutical policy and practice · 2021Article
- Pharmaceutical expenditure and gross domestic product: Evidence of simultaneous effects using a two-step instrumental variables strategy.Health economics · 2019Article
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Authors and funding
2 authors.
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Abstract
This paper estimates the income elasticity of government pharmaceutical spending and assesses the simultaneous effect of such spending on gross domestic product (GDP). Using a panel dataset for 136 countries from 1995 to 2006, we employ a two-step instrumental variable procedure where we first estimate the effect of GDP on public pharmaceutical expenditure using tourist receipts as an instrument for GDP. In the second step, we construct an adjusted pharmaceutical expenditure series where the response of public pharmaceutical expenditure to GDP is partialled out and use this endogeneity adjusted series as an instrument for pharmaceutical expenditure. Our estimations show that GDP has a strong positive impact on pharmaceutical spending with elasticity in excess of unity in countries with low spending on pharmaceuticals and countries with large economic freedom. In the second step, we find that when the quantitatively large reverse effect of GDP is accounted for, public pharmaceutical spending has a negative effect on GDP per capita particularly in countries with limited economic freedom.
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