Investigating the Cyclical Behavior of Public Health Expenditures and its Impact on Health Outcomes in OIC Member Countries

The main purpose of this research is to investigate the cyclical behavior of public health expenditures and its effect on health outcomes indicators in 50 member countries of the Organization of Islamic Conference (OIC) during the years 2000-2019. For this purpose, the Christiano-Fitzgerald (CF) filter was used to extract the cyclical trend and the Two-Stage Least Squares (2SLS) estimator was used to estimate the models. The results show that the average value of the cyclical parameter in the studied countries is 0.121, and public health expenditures had pro-cyclical behavior in 29 countries and counter-cyclical behavior in 21 countries. Also, increasing the cyclical parameter (increase in pro-cyclical behavior) of public health expenditures has a significant and negative effect on health outcomes and leads to an increase in the under-five mortality rate (with an estimated coefficient of 0.081) and a decrease in life expectancy (with an estimated coefficient of -0.022) in OIC countries. The results of the estimation of factors affecting the cyclical parameter also show that increasing the share of public health expenditures of the total public expenditures, increasing the weight of social security funds in health budgets and improving institutional quality led to a decrease in the pro-cyclical behavior of public health expenditures and increasing the level of democracy leads to its increase.