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Ms. Evridiki Tsounta

intervention. For example, a World Bank (2006) study finds a strong negative relationship between government health spending and health outcomes as measured by maternal mortality and child mortality. They also find that a 10 percent increase in government health spending has a larger net impact in reducing under-five mortality and maternal mortality than a 10 percent increase in education, roads, or infrastructure. Impact of a 10 Percent Increase in Government Health Spending on: Under-Five Mortality Maternal Mortality (percent change

Mr. Steven A Barnett and Mr. R. Brooks

health, but not on education, has an impact in reducing urban household saving. The impact, moreover, is large. A 1 yuan increase in government health spending was associated with a 2 yuan increase in household consumption. Total (household plus government) consumption could thus increase by as much as 3 yuan depending on the extent that government health spending takes the form of consumption instead of transfers. For rural households, on the other hand, the evidence is more mixed. Increased government health spending in rural areas appears only to have an impact on