Page 121 - GHES-2-4

Global Health Economics and
Sustainability

ORIGINAL RESEARCH ARTICLE
Impact of fiscal policy shocks on health

outcomes in Sub-Saharan Africa: A panel
structural VAR approach

Chukwunonso Gerald Iheoma*

Department of Statistics, Central Bank of Nigeria, Abuja, Nigeria

Abstract

This study investigates the impact of fiscal policy shocks on health outcomes in
Sub-Saharan Africa (SSA). It is motivated by health systems’ increasing reliance on
public funding despite growing macroeconomic uncertainties. This study adopts a
regional analysis, sampling five countries with the highest per capita public health
expenditure from the Central, Eastern, Southern, and Western African regions. The
study employs the panel structural vector autoregression technique and expresses
health outcomes as a function of fiscal policy and private health expenditure shocks.
The results suggest that fiscal policy shock significantly and positively affects health
outcomes in Central and Western Africa. However, health outcomes are resilient to
fiscal policy shock in Eastern and Southern regions and to private health expenditure
shock in all regions. The study indicates that achieving sustainable improvement in
Academic editor: health outcomes in SSA would require policies designed to expand health financing
Mihajlo Jakovljevic M.D. Ph.D. MAE options beyond the traditional public and private funding arrangements.
*Corresponding author:
Chukwunonso Gerald Iheoma
(iheomanonso@gmail.com) Keywords: Health outcome; Life expectancy; Fiscal policy; Private expenditure; Shocks
Citation: Iheoma, C.G. (2024).
Impact of fiscal policy shocks on
health outcomes in Sub-Saharan
Africa: A panel structural VAR 1. Introduction
approach. Global Health Econ
Sustain, 2(4):3454. Achieving universal health coverage (UHC) has been a major development priority
https://doi.org/10.36922/ghes.3454 for sub-Saharan African (SSA) countries because it presents huge opportunities
Received: April 19, 2024 for improving health outcomes. Ensuring health and well-being for all is the third
Sustainable Development Goal (SDGs). As a healthy population is required to provide
Accepted: May 30, 2024
the workforce needed to drive the economic development process, this goal becomes
Published Online: October 18, 2024 critical for achieving other SDGs and for promoting economic growth and development.
Copyright: © 2024 Author(s). In developing countries, there is evidence that a USD1 investment in health could
This is an Open Access article provide households with economic benefits of USD2 – 4, which could translate to 7 –
distributed under the terms of the
Creative Commons Attribution 11% growth in the gross domestic product (GDP; Remes et al., 2020). In SSA, economic
License, permitting distribution, benefits arising from investment in health outweigh those of foreign direct investment
and reproduction in any medium, (Byaro et al., 2022).
provided the original work is
properly cited. Low employment and income levels in the region have resulted in growing reliance
Publisher’s Note: AccScience on government expenditure for financing the health system. The dependence of
Publishing remains neutral with health systems on public funding is supported by the evidence that increasing public
regard to jurisdictional claims in
published maps and institutional health expenditure leads to an increase in life expectancy and a decrease in infant and
affiliations. under-five mortality rates in middle- and high-income countries, and these outcomes

Volume 2 Issue 4 (2024) 1 https://doi.org/10.36922/ghes.3454