The Impact of Medical and Health Fiscal Expenditures on Pharmaceutical Industry Stock Index in China

Chiwei Su, Yiru Liu, Chang Liu and Ran Tao ()
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Chiwei Su: School of Business, Wuhan University of Technology, Wuhan 430062, China
Yiru Liu: School of Economics, Qingdao University, Qingdao 266071, China
Chang Liu: Qingdao Municipal Center for Disease Control & Preventation, Qingdao 266032, China
Ran Tao: Qingdao Municipal Center for Disease Control & Preventation, Qingdao 266032, China

IJERPH, 2022, vol. 19, issue 18, 1-14

Abstract: This paper investigates the relationship between fiscal expenditure on health care ( FE ) and the pharmaceutical industry stock index ( SP ) by using full-sample and sub-sample rolling-window bootstrap causality tests. It can be observed that there is both a positive and negative relationship between FE and SP . FE will promote the rise of the pharmaceutical stock market, which proves the Keynesian theory, while the result that FE negatively affects SP supports the classical theory. In turn, SP positively impacts FE, which indicates that the development of the pharmaceutical industry and the increase in medical and health expenditures can promote each other. In addition, the negative influence of SP on FE suggests that the impact of the pharmaceutical index on fiscal expenditure needs to be judged in conjunction with other events and market conditions. In complex economic conditions, investors can rationally consider the industry situation of the pharmaceutical market and benefit by optimising their investment portfolios. The government can regulate and guide the pharmaceutical industry by adjusting the fiscal expenditure on health care, thereby promoting the sustainable and stable development of the financial market.

Keywords: medical and health fiscal expenditure; pharmaceutical industry; causal relationship; time-varying (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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