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Economic policy uncertainty and the dynamics of healthcare expenditure in China
Yuan Sui1, Lantong Zhang2, Shuyu Han3
1School of Taxation, Jilin University of Finance and Economics, Jilin, Changchun, China.
Abstract:
This study examines the dynamic impact of Economic Policy Uncertainty (EPU) on China's healthcare fiscal expenditures, focusing on the rational allocation of public funds under macroeconomic fluctuations. The study utilize the SV-TVP-FAVAR model to analyze quarterly national data (2007-2025) and inter-provincial data (2009-2019), overcoming traditional static model limitations. EPU shocks exhibit significant time-variability: a negative "squeezing" effect during the 2008 financial crisis but a counter-cyclical expansionary effect during the 2020 COVID-19 pandemic. Regional fiscal strength moderates these impacts. Findings suggest that fiscally robust regions show resiliency through counter-cyclical spending, whereas fiscally fragile areas exhibit pro-cyclical tightening. Policy recommendations focus on long-term healthcare investment mechanisms and optimized transfer payments.
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