The Unassuming Economist

From a paper by Ngoc Duc Lang and Duc Hong Vo:

“This paper aims to examine the relationship between geopolitical risk, arms race proxied by military spending, and health expenditure in 43 countries from 1990 to 2021–the period with many significant geopolitical events. This study addresses potential endogeneity issues by using novel causal inference approaches, including the two-step system generalized method of moments (GMM), Lewbel-IV estimation, and Half-Panel Jackknife (HPJ) estimation. We find that geopolitical risk significantly reduces public health expenditure. This finding has largely remained across various settings. Our finding also confirms a heterogeneity in the impacts of geopolitical risk on public health expenditure in countries with different living standards. More specifically, countries with lower living standards suffer more adverse effects of geopolitical risk on public health expenditure. Our results also indicate that military spending serves as the mediating channel through which geopolitical risk reduces public health expenditure.”