The Relationship Between the Health Services Price Index and The Real Effective Exchange Rate Index in Turkey: A Frequency Domain Causality Analysis

Öz

This paper examines whether the causal relationship between the health care price index and the real exchange rate index is temporary or permanent. To do this, we first apply the Toda- Yamamoto causality test with a structural break and then continue with frequency domain causality tests based on the Toda-Yamamoto causality test with a structural break. The results of the Toda- Yamamoto causality test with a structural break indicates that there is causality running from the real exchange rate index to the health care price index. Moreover, the frequency domain causality test results based on the Toda-Yamamoto causality test with a structural break provide evidence that the real effective exchange rate causes temporarily (in the short-and medium term) to the health care price index. The effect of the real exchange rate index on the health care price index lasts between 2 months and 8.37 months. These findings imply that there is a significant exchange rate pass-through in health care inflation in the short-and medium term. Thus, the health authorities should take into account these findings when planning health care policies in Turkey, especially health care services heavily dependent on imported materials.

Anahtar Kelimeler

• Health Inflation
• Exchange Rate Pass-through
• Frequency Domain Causality
• Toda-Yamamoto Causality Test
• Health Sector in Turkey

Kaynakça

1. Akgul, I., & Özdemir, S. (2018). Inflation - Interest Rate – Exchange Rate Dilemma: Turkish Reality During The GEG Program. Ege Academic Review, 18(1).
2. Allor, P. W. (2020). The Effect of Monetary Policy and Inflation on The Exchange Rate: A Case Study of Ghana. Journal of Economics and International Finance, 12(4), 151-163.
3. Alvarez, R., Jaramillo, P., & Selaive, J. (2012). Is The Exchange Rate Pass-Through İnto İmport Prices Declining? Evidence from Chile. Emerging Markets Finance and Trade, 48(1), 100-116.
4. Apergis, N. (2015). Asymmetric Real Exchange Rate Pass-Through and Poverty in China: Evidence from a Nonlinear Model. Applied Economics Letters, 22, 951–54.
5. Atilgan, E., Kilic, D., & Ertugrul, H. M. (2017). The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?. The European Journal of Health Economics, 18(5), 567-574.
6. Baltagi, B. H., & Moscone, F. (2010). Health Care Expenditure and Income in The OECD Reconsidered: Evidence from Panel Data. Economic modelling, 27(4), 804-811.
7. Bandt, O. & Razafindrabe, T. (2014). Exchange Rate Pass-Through to Import Prices in The Euro-Area: A Multi-Currency Investigation. International Economics, 138,63-77.
8. Bissoondeeal, R. K., Karoglou, M., & Gazely, A. M. (2011). Forecasting The UK/US Exchange Rate with Divisia Monetary Models and Neural Networks. Scottish Journal of Political Economy, 58(1), 127-152.

9. Breitung, J., & Candelon, B. (2006). Testing for Short- And Long-Run Causality: A Frequency-Domain Approach. Journal of Econometrics, 132(2), 363–378.
10. Cafrı, R. (2020). An Analysis of the Socio-Economic and Environmental Determinants of Health Spending in Turkey. Academic Studies in Economics and Administrative Sciences (Editors: Zafer Gölen, Yüksel Akay Unvan, Sevilay Özer), 1st Edition, March 2020, Cetinje, Montenegro, 341-353.
11. Campa, J. M., & Goldberg, L. S. (2005). Exchange Rate Pass-Through into Import Prices. Review Of Economics And Statistics, 87(4), 679-690.
12. Chaabouni, S., & Abednnadher, C. (2014). The Determinants of Health Expenditures in Tunisia: An ARDL Bounds Testing Approach. International Journal of Information Systems in The Service Sector (IJISSS), 6(4), 60-72.
13. Chaabouni, S., & Saidi, K. (2017). The Dynamic Links Between Carbon Dioxide (CO2) Emissions, Health Spending and GDP Growth: A Case Study for 51 Countries. Environmental Research, 158, 137-144.
14. Charef, F., & Ayachi, F. (2018). Non-Linear Causality Between Exchange Rates, Inflation, Interest Rate Differential and Terms of Trade In Tunisia. African Journal of Economic and Management Studies, 9(3), 274-289.
15. Chou, W. L. (2007). Explaining China's Regional Health Expenditures Using LM-Type Unit Root Tests. Journal of Health Economics, 26(4), 682-698.
16. Choudhri, E.U., & Hakura, D.S. (2006). Exchange Rate Pass-Through to Domestic Prices: Does The Inflationary Environment Matter?”. Journal of International Money and Finance, 25 (4), 614–639.
17. Dereli, D. D. (2018). Analysis of The Relationship Between Exchange Rate and Inflation in Turkey (2005-2017). Electronic Turkish Studies, 13(30), 137-151.
18. Dhoro, N. L., Chidoko, C., Sakuhuni, R. C., & Gwaindepi, C. (2011). Economic Determinants of Public Health Care Expenditure in Zimbabwe. International Journal of Economics and Research, 2(6), 13-25.
19. Di Matteo, L., & Di Matteo, R. (1998). Evidence On the Determinants of Canadian Provincial Government Health Expenditures: 1965–1991. Journal of Health Economics, 17(2), 211-228.
20. Dreger, C., & Reimers, H. E. (2005). Health Care Expenditures in OECD Countries: A Panel Unit Root And Cointegration Analysis. Discussion Paper Series. IZA DP No. 1469
21. Ecevit, E., Cetin, M., & Yücel, A. G. (2018). The Determinants of Health Expenditures in Turkic Republics: A Panel Data Analysis. Journal of Academic Research and Studies (AKAD), 10 (19), 318-334.
22. Eğilmez, M. (2016). Negatif Ayrışan Türk Lirası. Retrieved November 5, 2020, From Https://Www.Mahfiegilmez.Com/2016/11/Negatif-Ayrsan-Turk-Liras.Html
23. Elmi, Z. M., & Sadeghi, S. (2012). Health Care Expenditures and Economic Growth in Developing Countries: Panel Co-Integration and Causality. Middle-East Journal of Scientific Research, 12(1), 88-91.
24. Freeman, D. G. (2003). Is Health Care a Necessity or A Luxury? Pooled Estimates of Income Elasticity from US State-Level Data. Applied Economics, 35(5), 495-502.
25. Furuoka, F., Lim, B. F. Y., Kok, E., Hoque, M. Z., & Munir, Q. (2011). What Are the Determinants of Health Care Expenditure? Empirical Results from Asian Countries. Sunway Academic Journal, 8, 12-25.
26. Gerdtham, U. G., & Löthgren, M. (2000). On Stationarity and Cointegration of International Health Expenditure And GDP. Journal of Health Economics, 19(4), 461-475.
27. Gerdtham, U. G., & Löthgren, M. (2002). New Panel Results On Cointegration of International Health Expenditure and GDP. Applied Economics, 34(13), 1679-1686.
28. Geweke, J. (1982). Measurement of Linear Dependence and Feedback Between Multiple Time Series. Journal of The American Statistical Association, 77(378), 304. Https://Doi.Org/10.2307/2287238
29. Ghosh, A., And Ramkishen S. Rajan. (2009). Exchange Rate Pass-Through in Korea and Thailand: Trends and Determinants. Japan and The World Economy, 21(1), 55–70.
30. Gul, E., & Ekinci, A. (2006). The Causal Relationship Between the Real Exchange Rate and Export and Import in Turkey:1990-2006. Dumlupınar University Journal of Social Sciences, 16 (1), 165-190.
31. Hansen, P., & King, A. (1996). The Determinants of Health Care Expenditure: A Cointegration Approach. Journal of Health Economics, 15(1), 127-137.
32. Hansen, P., & King, A. (1998). Health Care Expenditure and GDP: Panel Data Unit Root Test Results--Comment. Journal of Health Economics, 17(3), 377-381.
33. Herwartz, H., & Theilen, B. (2003). The Determinants of Health Care Expenditure: Testing Pooling Restrictions in Small Samples. Health Economics, 12(2), 113-124.
34. Hitiris, T. (1997). Health Care Expenditure and Integration in The Countries of the European Union. Applied Economics, 29(1), 1-6. Hitiris, T., & Posnett, J. (1992). The Determinants and Effects of Health Expenditure in Developed Countries. Journal of Health Economics, 11(2), 173-181.
35. Hosoya, Y. (1991). The Decomposition and Measurement of the Interdependency Between Second-Order Stationary Processes. Probability Theory and Related Fields, 88(4), 429–444.
36. Ito, T., & Sato, K. (2008). Exchange Rate Changes and Inflation in Post‐Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass‐Through. Journal of Money, Credit and Banking, 40(7), 1407-1438.
37. Jewell, T., Lee, J., Tieslau, M., & Strazicich, M. C. (2003). Stationarity of Health Expenditures and GDP: Evidence from Panel Unit Root Tests with Heterogeneous Structural Breaks. Journal of Health Economics, 22(2), 313-323.
38. Jiang, J., & Kim, D. (2013). Exchange Rate Pass-Through To İnflation İn China. Economic Modelling, 33, 900-912.
39. Jobarteh, M., & Yeboua, K. (2016). Exchange Rate Pass-Through And Consumer Prices: Empirical Evidence From The Gambia. International Journal of Economics, Commerce And Management, IV (11), 16-25.
40. Karasoy, A., & Demirtas, G. (2018). An Application on The Determinants of Health Expenditures: Investigating the Impacts of Environmental Pollution and Governance. Itobiad: Journal of The Human & Social Science Researches, 7(3), 1917-1939.
41. Karatzas, G. (2000). On The Determination of The US Aggregate Health Care Expenditure. Applied Economics, 32(9), 1085-1099.
42. Kholdy, S., & Sohrabian, A. (1990). Exchange Rates and Prices: Evidence from Granger Causality Tests. Journal of Post Keynesian Economics, 13(1), 71-78.
43. Kiliç, R. (2016). Regime-Dependent Exchange-Rate Pass-Through to Import Prices. International Review of Economics & Finance, 41, 295-308.
44. Kiptui, L. K. (2005). Exchange Rate Pass-Through to Domestic Prices in Kenya: 1972-2004 (Doctoral Dissertation, University Of Nairobi).
45. Kırca, M., Canbay, Ş., & Pirali, K. (2020). Is The Relationship Between Oil-Gas Prices Index and Economic Growth in Turkey Permanent? Resources Policy, 69. Https://Doi.Org/10.1016/J.Resourpol.2020.101838
46. Kurt, S. (2015). Government Health Expenditures and Economic Growth: A Feder-Ram Approach for The Case of Turkey. International Journal of Economics and Financial Issues, 5(2), 441-447.
47. Leigh, D., & Rossi, M. (2002). Exchange Rate Pass-Through In Turkey. IMF Working Paper No. 02/204, Available At SSRN: Https://Ssrn.Com/Abstract=880852
48. López-Villavicencio, A. & Mignon, V. (2020). On The Seemingly Incompleteness Of Exchange Rate Pass-Through To Import Prices: Do Globalization and/or Regional Trade Matter?. Recent Econometric Techniques For Macroeconomic And Financial Data, 35-59.
49. Madesha, W., Chidoko, C., & Zivanomoyo, J. (2013). Empirical Test of the Relationship Between Exchange Rate and Inflation in Zimbabwe. Journal of Economics and Sustainable Development, 4(1), 52-58.
50. Mccoskey, S. K., & Selden, T. M. (1998). Health Care Expenditures and GDP: Panel Data Unit Root Test Results. Journal of Health Economics, 17(3), 369-376.
51. Mehrara, M., & Musai, M. (2011). The Causality Between Health Expenditure and Economic Growth in Iran. Int. J. Eco. Res, 2(4), 13-19.
52. Monfared, S. S., & Akın, F. (2017). The Relationship Between Exchage Rates and Inflation: The Case of Iran. European Journal of Sustainable Development, 6(4), 329-329.
53. Moscone, F., & Tosetti, E. (2010). Health Expenditure and Income in The United States. Health Economics, 19(12), 1385-1403.
54. Murthy, N. V., & Ukpolo, V. (1994). Aggregate Health Care Expenditure in The United States: Evidence from Cointegration Tests. Applied Economics, 26(8), 797-802.
55. Murthy, V. N., & Okunade, A. A. (2016). Determinants of US Health Expenditure: Evidence from Autoregressive Distributed Lag (ARDL) Approach to Cointegration. Economic Modelling, 59, 67-73.
56. Narayan, P. K. (2006). Examining Structural Breaks and Growth Rates in International Health Expenditures. Journal of Health Economics, 25(5), 877-890.
57. Newhouse, J. P. (1977). Medical-Care Expenditure: A Cross-National Survey. The Journal of Human Resources, 12(1), 115-125.
58. Nghiem, S. H., & Connelly, L. B. (2017). Convergence and Determinants of Health Expenditures in OECD Countries. Health Economics Review, 7(1), 1-11.
59. Odubunmi, A. S., Saka, J. O., & Oke, D. M. (2012). Testing The Cointegrating Relationship Between Health Care Expenditure and Economic Growth in Nigeria. International Journal of Economics and Finance, 4(11), 99-107.
60. Okunade, A. A., & Karakus, M. C. (2001). Unit Root and Cointegration Tests: Timeseries Versus Panel Estimates for International Health Expenditure Models. Applied Economics, 33(9), 1131-1137.
61. Oni, L. B. (2014). Analysis of The Growth Impact of Health Expenditure in Nigeria. IOSR Journal of Economics and Finance, 3(1), 77-84.
62. Ozer, M., & Kamisli, M. (2015). Frequency Domain Causality Analysis of Interactions Between Financial Markets of Turkey. International Business Research, 9(1), 176-186.
63. Özkan, F. (2012). A Comparison of the Monetary Model and Artificial Neural Networks in Exchange Rate Forecasting. Business and Economics Research Journal, 3(1), 27-39.
64. Öztürk, S., & Küsmez, T. (2019). Determinants of Health Expenditures: Analysis of BRICS-T Countries. Çukurova University Faculty of Economics and Administrative Sciences Journal, 23 (1), 31-47.
65. Panopoulou, E., & Pantelidis, T. (2012). Convergence in Per Capita Health Expenditures and Health Outcomes in The OECD Countries. Applied Economics, 44(30), 3909-3920.
66. Peker, O., & Görmüş, S. (2008). The Inflationary Effects of the Exchange Rate in Turkey. Journal of Süleyman Demirel University Faculty of Economics and Administrative Sciences, 13(2), 187-202.
67. Permani, R. (2020). FTA, Exchange Rate Pass‐Through and Export Price Behavior – Lessons from The Australian Dairy Sector. The Australian Journal of Agricultural and Resource Economics, 65 (1), 132-221.
68. Perron, P. (1989). The Great Crash, The Oil Price Shock, And The Unit Root Hypothesis. Econometrica, 57(6), 1361-1401.
69. Perron, P. (2006). Dealing with Structural Breaks. Palgrave Handbook of Econometrics, 1(2), 278–352.
70. Perron, P., & Vogelsang, T. J. (1993). Erratum: The Great Cash, The Oil Price Shock and The Unit Root Hypothesis. Econometrical, 61(1), 248.
71. Phillips, P. C. B., & Perron, P. (1988). Testing for A Unit Root in Time Series Regression. Biometrika, 75(2), 335-346.
72. Piabuo, S. M., & Tieguhong, J. C. (2017). Health Expenditure and Economic Growth-A Review of the Literature and an Analysis Between the Economic Community for Central African States (CEMAC) And Selected African Countries. Health Economics Review, 7(1), 1-13.
73. Potrafke, N. (2010). The Growth of Public Health Expenditures in OECD Countries: Do Government Ideology and Electoral Motives Matter?. Journal of Health Economics, 29(6), 797-810.
74. Prasertnukul, W., Kim, D., & Kakinaka, M. (2010). Exchange Rates, Price Levels, and İnflation Targeting: Evidence from Asian Countries. Japan and the World Economy, 22(3), 173-182.
75. Rana, P. B., & Dowling Jr, J. M. (1985). Inflationary Effects of Small but Continuous Changes in Effective Exchange Rates: Nine Asian Ldcs. The Review of Economics and Statistics, 67(3), 496-500.
76. Rana, R. H., Alam, K., & Gow, J. (2020). Health Expenditure and Gross Domestic Product: Causality Analysis by Income Level. International Journal of Health Economics and Management, 20(1), 55-77.
77. Saha, S., & Zhang, Z. (2016) “Exchange Rate Pass-Through and Its Impact On Inflation: A Comparative Study for Australia, China and India with Disaggregated Data.” Journal of Economic Research, 21 (1): 1–33.
78. Said, S. E., & Dickey, D. A. (1984). Testing for Unit Roots in Autoregressive-Moving Average Models of Unknown Order. Biometrika, 71(3), 599. Https://Doi.Org/10.2307/2336570
79. Selim, S., & Güven, E. T. A. (2014). Econometric Analysis of the Relationship Among Inflation, The Exchange Rate and Unemployment in Turkey. AİBÜ-İİBF Economic and Social Research Journal, 10(1), 127-146.
80. Simo-Kengne, B. Viljoen, J., & Nduku, P. M. (2020). Exchange Rate Pass-Through to Producer Prices In South Africa: Evidence From Panel Contemporaneous Correlated Approach. Journal of African Business, 23(1), 225-245.
81. Sims, C. A. (1980). Macroeconomics and Reality. Econometrical, 48(1), 1-48.
82. Sülkü, S. N., & Caner, A. (2011). Health Care Expenditures and Gross Domestic Product: The Turkish Case. The European Journal of Health Economics, 12(1), 29-38.
83. Takatoshi, I., & Kiyotaka, S. (2006). Exchange Rate Changes and Inflation in Post-Crisis Asian Economies. NBER Working Paper, 2395.
84. Tastan, H. (2015). Testing for Spectral Granger Causality. In The Stata Journal, 15(4), 1157-1166.
85. Teimourizad, A., Hadian, M., Rezaei, S., & Rad, E. H. (2014). Health Sector Inflation Rate And İts Determinants İn Iran: A Longitudinal Study (1995–2008). Iranian Journal of Public Health, 43(11), 1537.
86. Telatar, F., & Telatar, E. (2003). The Relationship Between Inflation and Different Sources of Inflation Uncertainty in Turkey. Applied Economics Letters, 10(7), 431-435.
87. The Central Bank of the Republic of Turkey, 2020. Electronic Data Delivery System. Https://Evds2.Tcmb.Gov.Tr/. (Accessed 15 September 2020)
88. Tiraş, H. H., & Türkmen, S. (2020). A Research On the Determinants of Health Expenditures; Example of EU and Turkey. Bingöl University Faculty of Economics and Administrative Sciences Journal, 4 (1), 107-139.
89. Toda, H. Y., & Yamamoto, T. (1995). Statistical Inference in Vector Autoregressions with Possibly Integrated Processes. Journal of Econometrics, 66(1–2), 225–250.
90. Toh, M. H., & Ho, H. J. (2001). Exchange Rate Pass-Through For Selected Asian Economies. The Singapore Economic Review, 46(02), 247-273.
91. TURKSTAT (2020) Https://Data.Tuik.Gov.Tr/Kategori/Getkategori?P=Saglik-Ve-Sosyal-Koruma-101&Dil=1
92. Wang, Z., & Rettenmaier, A. J. (2007). A Note On Cointegration of Health Expenditures and Income. Health Economics, 16(6), 559-578.
93. Wang, Z., Asghar, M. M., Zaidi, S. A. H., & Wang, B. (2019). Dynamic Linkages Among CO 2 Emissions, Health Expenditures, And Economic Growth: Empirical Evidence from Pakistan. Environmental Science and Pollution Research, 26(15), 15285-15299.
94. Word Bank (2020) Https://Data.Worldbank.Org/Indicator/SH.XPD.CHEX.PC.CD
95. Yasgul, Y. S. (2016). Determinant of Pharmaceutical Import in Turkey, 1996-2011. Anadolu University Journal of Social Sciences, 16 (2), 21-36.
96. Yien, L. C., Abdullah, H., & Azam, M. (2017). Granger Causality Analysis Between Inflation, Debt and Exchange Rate: Evidence from Malaysia. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(1), 189-196.
97. Yip, W. C., Lee, Y. C., Tsai, S. L., & Chen, B. (2019). Managing Health Expenditure Inflation Under a Single-Payer System: Taiwan's National Health Insurance. Social Science & Medicine, 233, 272-280. Https://Doi.Org/10.1016/J.Socscimed.2017.11.020
98. Zhang T., & Li, Y. (2017). Incomplete Exchange Rate Pass-Through: Evidence from Exchange Rate Reform in China. Emerging Markets Finance and Trade, 53 (3), 710–726.
99. Zivot, E., & Andrews, D. W. K. (1992). Further Evidence on the Great Crash, The Oil-Price Shock, and The Unit-Root Hypothesis. Journal of Business & Economic Statistics, 10(3), 25-44.