Abstract
Using the panel data of 31 regions in China from 2002 to 2018, this study aims to investigate the effect of business cycles on health expenditure from the role of income inequality. We find that health expenditure experiences a change from pro-cyclical to counter-cyclical with business cycles. Specifically, business cycles have a different influence on health expenditure before and after the financial crisis in 2008. Our findings also show that income inequality can moderate the impact of business cycles on health expenditure in China. More importantly, the role of income inequality in the above issue varies from different regions. We conclude that the government should try to take active steps to control health expenditure by decreasing income inequality.
Highlights
During the economic downturn caused by COVID-19, the relationship between business cycles and health issues has again attracted the attention of academics [1]
This study aims to investigate the impact of business cycles on health expenditure in China from the perspective of income inequality using the data of 31 regions in China from 2002 to 2018
We explore the effect of income inequality on the relationship between business cycles and health expenditure by using Model [2]
Summary
During the economic downturn caused by COVID-19, the relationship between business cycles and health issues has again attracted the attention of academics [1]. As can be seen from the figure, the trend of health expenditure is opposed to that of business cycles during 2002–2018. It indicates that the faster China’s economic development is, the smaller the share of health expenditure will be. We can generally conclude that health expenditure is counter-cyclical with business cycles in China during 2002–2018
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