Identifying the Causality Relationship between Health Expenditure and Economic Growth: An Application on E7 Countries

Year 2019, Volume: 1 Issue: 1, 5 - 23, 07.01.2019

Hasan Dinçer , Serhat Yuksel

Abstract

This study aims to identify the causality relationship
between health expenditure and economic growth in emerging economies. Within
this framework, E7 countries are evaluated by using Pedroni panel cointegration
method and Dumitrescu Hurlin panel causality analysis. For this purpose, annual
data for the years between 1996 and 2016 is considered. As a result of Pedroni
panel cointegration test, it is defined that there is a long run relationship
between economic growth with total health expenditure and public health
expenditure, but this relationship is not valid between private health care
expenditure and economic growth. According to Dumitrescu Hurlin panel causality
analysis results, it is concluded that there is not a causality relationship
from the health expenditure to the economic growth. However, it is also
determined that economic growth is the main cause of total, public and private
health expenditure. Therefore, it is recommended that the role of private
sector in health should be improved so that the health expenditure can have a
positive contribution to the economic development of emerging countries.

Keywords

Health Expenditure, E7 Countries, Economic Growth, Pedroni Panel Cointegration Analysis, Dumitrescu Hurlin Panel Causality Analysis

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