Does government effectiveness moderate the association between government health expenditure and life expectancy? Evidence from OECD countries, 2010–2023

Government health expenditure may improve population health, but its contribution can depend on the institutional capacity through which resources are managed. This study examined whether government effectiveness moderates the association between government health expenditure and life expectancy across 38 current OECD member countries from 2010 to 2023. A panel of 532 country-year observations was analysed using two-way fixed-effects and random-effects models, with the Mundlak test supporting fixed effects. Government health expenditure and government effectiveness showed positive but statistically insignificant direct associations with life expectancy. Their interaction was positive and marginally significant in the preferred two-way fixed-effects model, although conditional associations were insignificant and the result was not robust to Driscoll–Kraay standard errors, a one-year expenditure lag, or exclusion of 2020–2021. GDP per capita was the only consistently significant covariate. Taken together, the findings do not provide robust evidence that government effectiveness moderates the association between government health expenditure and life expectancy in OECD countries.