Table 4 Description of variables

Public Health Care Expenditure

Health expenditure incurred by public funds. Public funds are state, regional and local Government bodies and social security schemes. Public capital formation on health includes publicly financed investment in health facilities plus capital transfers to the private sector for hospital construction and equipment.

OECD 2015

Debt

General government debt is the amount of a country’s total gross government debt. It is an indicator of an economy’s budgetary health and a key factor for the sustainability of government finance. Debt is commonly defined as a specific subset of liabilities identified according to the types of financial instruments included or excluded. Debt is thus obtained as the sum of the following liability categories (as applicable): currency and deposits; securities other than shares, except financial derivatives; loans; insurance technical reserves; and other accounts payable. Changes in government debt over time reflect the impact of government deficits. This indicator is measured as a percentage of GDP. Data are under System of National Accounts (SNA 1993) for all countries except for Australia and United States (SNA 2008).

Studies by Pammolli et al. and Gerdtham et al. [1, 32] discuss the relation between debt and public health expenditure and argue that countries with higher debt exhibit lower level of public expenditure.

OECD 2015

GDP

Gross domestic product is an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs). The sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers’ prices, less the value of imports of goods and services, or the sum of primary incomes distributed by resident producer units.

We have included this variable – supported by the literature on the determinants of health expenditure [1,2,3,4] – to capture economic and societal determinants of health expenditure, such as income and price developments, the spread of medical technologies and general attitudes towards health care consumption.

OECD 2015

Population

Population is defined as all nationals present in, or temporarily absent from a country, and aliens permanently settled in a country. This indicator shows the number of people that usually live in an area. Growth rates are the annual changes in population resulting from births, deaths and net migration during the year. Total population includes the following: national armed forces stationed abroad; merchant seamen at sea; diplomatic personnel located abroad; civilian aliens resident in the country; displaced persons resident in the country. However, it excludes the following: foreign armed forces stationed in the country; foreign diplomatic personnel located in the country; civilian aliens temporarily in the country. Population projections are a common demographic tool. They provide a basis for other statistical projections, helping governments in their decision making. This indicator is measured in thousands of people.

Ageing being an important driver for health expenditure, earlier versions of the draft contained population over 65 (POP65) as the independent variable, producing equivalent results in the regression.

OECD 2015

Deficit ratio

This ratio expresses deficit in terms of GDP

OECD

IMF bailout

This dummy is modeled after Reeves et al. [6] and includes Stand-by Arrangements (SBA) and Extended Fund Facilities (EFF):

IMF bailouts include Stand-by Arrangements, usually short-term lending to states to cover the effect of unanticipated shocks, and Extended Fund Facilities, which are usually medium- or long-term lending programs aimed at overcoming weaknesses in the national economy which may have precipitated or exacerbated the shock.

IMF becomes 1 the year after the agreement has been made.

This reflects the time lag between the loan and the implementation of any changes to government spending, i.e., if an agreement was made in 2008 the variable would measure 1 in 2009 and remain 1 while the bailout is active. When the agreement ends the indicator becomes 0.

IMF’s Monitoring of Fund Arrangements database (MONA)

FR

This dummy variable indicates if a fiscal rule (ER, BBR, RR, DR) is present (1) or not (0) for a given country, in a given year.

IMF 2016

ER

This dummy variable indicates if an expenditure rule is present (1) or not (0), in a given year.

IMF 2016

BBR

This dummy variable indicates if a balanced budget rule is present (1) or not (0), in a given year.

IMF 2016

BBR NAT

This ordinal dummy variable indicates if a balanced budget rule at the national level is present (1) or not (0), in a given year.

IMF 2016

BBR SUPRA

This ordinal dummy variable indicates if a balanced budget rule at the supranational level is present (1) or not (0), in a given year.

IMF 2016

BBR BOTH

This ordinal dummy variable indicates if a balanced budget rule at both the national and supranational level is present (1) or not (0), in a given year.

IMF 2016

DR

This dummy variable indicates if a debt rule is present (1) or not (0), in a given year.

IMF 2016