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Health Care Investments and Economic Performance in Portugal: An Industry Level Analysis

Author

Listed:
  • Alfredo Marvão Pereira

    (Department of Economics, The College of William and Mary, PO Box 8795, Williamsburg VA 23187, United States of America)

  • Rui Manuel Pereira

    (Department of Economics, The College of William and Mary, PO Box 8795, Williamsburg VA 23187, United States of America)

  • Pedro G. Rodrigues

    (Centro de Administração e Políticas Públicas (CAPP), and Instituto Superior de Ciências Sociais e Políticas (ISCSP), Universidade de Lisboa, Rua Almerindo Lessa, 1300-663 Lisboa, Portugal)

Abstract
We analyze how public and private health care investments affect economic performance in Portugal. With a newly-developed data set for twenty-two industries, we use a vector autoregressive model to estimate the elasticities and marginal products on investment, employment and output. First, every €1 million invested in health care yields significant positive spillover effects, boosting investment and GDP by €24.74 and €20.45 million, respectively, and creating 188 net jobs. Adversely, net exports deteriorate, as most of the new capital goods are imported. Second, while only 28.2% of the total accumulated increase in GDP occurs within a year, investment is front-loaded with a corresponding 73.8%. Over this period, 68 workers are displaced for every €1 million invested. Third, at a disaggregated level, real estate, construction, and transportation and storage are the three industries where output shares increase the most. Employment shares increase the most in professional services, construction, and basic metals. These results have important policy implications. Health investments enhance long-term performance, but are unhelpful counter-cyclically. Also, they will change the industry mix: construction and professional services are the non-traded industries that will benefit the most, while the traded industries of non-metallic minerals, basic metals, and machinery and equipment benefit much less.

Suggested Citation

  • Alfredo Marvão Pereira & Rui Manuel Pereira & Pedro G. Rodrigues, 2017. "Health Care Investments and Economic Performance in Portugal: An Industry Level Analysis," GEE Papers 0083, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Nov 2017.
    • Handle: RePEc:mde:wpaper:0083
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    References listed on IDEAS

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    More about this item

    Keywords

    Health care investment; Economic performance; Industry mix; Vector autoregressive; Portugal;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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