Intersectoral Costs Research Articles

Valuing inter-sectoral costs and benefits of interventions in the healthcare sector: methods for obtaining unit prices

ABSTRACTIntroduction: There is a lack of knowledge about methods for valuing health intervention-related costs and monetary benefits in the education and criminal justice sectors, also known as ‘inter-sectoral costs and benefits’ (ICBs). The objective of this study was to develop methods for obtaining unit prices for the valuation of ICBs.Methods: By conducting an exploratory literature study and expert interviews, several generic methods were developed. The methods’ feasibility was assessed through application in the Netherlands. Results were validated in an expert meeting, which was attended by policy makers, public health experts, health economists and HTA-experts, and discussed at several international conferences and symposia.Results: The study resulted in four methods, including the opportunity cost method (A) and valuation using available unit prices (B), self-constructed unit prices (C) or hourly labor costs (D).Discussion: The methods developed can be used internationally and are valuable for the broad international field of HTA.

Fiscal Policy and the Real Exchange Rate

This paper examines the mechanisms through which government spending affects the dynamics of the real exchange rate. Using a two-sector dependent open economy model with intersectoral mobility costs for private capital, we show that public investment generates a (i) non-monotonic U-shaped adjustment path for the real exchange rate with sharp intertemporal trade-offs, and (ii) a crowding-in of private consumption, consistent with stylized facts. The effects of public consumption, however, are in sharp contrast to those of public investment. The effect of government spending on the real exchange rate depends critically on (i) the sectoral composition of public spending, (ii) the underlying financing policy, (iii) the sectoral intensity of private capital in production, (iv) the relative sectoral productivity of public infrastructure, (v) the elasticity of substitution in production, and (vi) intersectoral mobility costs for capital. In deriving these results, we identify conditions under which the predictions of the neoclassical open economy model can be reconciled with empirical regularities. Our results underscore the importance of decoupling the effects of government investment from government consumption in understanding the relationship between fiscal policy and the real exchange rate.

Fiscal Policy and the Real Exchange Rate

Government spending on infrastructure has recently increased sharply in many emerging-market economies. This paper examines the mechanism through which public infrastructure spending affects the dynamics of the real exchange rate. Using a two-sector dependent open economy model with intersectoral adjustment costs, we show that government spending generates a non-monotonic U-shaped adjustment path for the real exchange rate with sharp intertemporal trade-offs. The effect of government spending on the real exchange rate depends critically on (i) the composition of public spending, (ii) the underlying financing policy, (iii) the intensity of private capital in production, and (iv) the relative productivity of public infrastructure. In deriving these results, the model also identifies conditions under which the predictions of the neoclassical open economy model can be reconciled with empirical regularities, namely the intertemporal relationship between government spending, private consumption, and the real exchange rate.