An Empirical Analysis on the Relationship between Health Care Expenditures and Economic Growth in the European Union Countries

  • Çiğdem Börke Tunalı
  • Naci Tolga Saruç Department of Public Finance, Faculty of Economics, Istanbul University, Istanbul, Turkey.

Abstract

This paper empirically investigates the relationship between health expenditure and economic growth in the European Union countries over the period 1995-2014. By using the Dumitrescu-Hurlin Test (Dumitrescu and Hurlin, 2012) which is developed to test Granger causality in panel datasets (Lopez and Weber, 2017), it is found that there is a unidirectional relationship between these variables and gross domestic product (GDP) per capita Granger causes health expenditure per capita. After determining the direction of the relationship between health expenditure per capita and GDP per capita we estimate the short run and the long run effects of GDP per capita on health expenditure per capita by using Mean Group (MG) and Pooled Mean Group (PMG) estimators which are developed by Pesaran and Smith (1995) and Pesaran, Shin and Smith (1999) respectively. According to the estimation results, GDP per capita has a positive effect on health expenditure per capita both in the short run and the long run.
Published
Mar 2, 2018
How to Cite
BÖRKE TUNALI, Çiğdem; TOLGA SARUÇ, Naci. An Empirical Analysis on the Relationship between Health Care Expenditures and Economic Growth in the European Union Countries. European Journal of Medicine and Natural Sciences, [S.l.], v. 2, n. 1, p. 12-17, mar. 2018. ISSN 2601-6400. Available at: <http://journals.euser.org/index.php/ejmn/article/view/3180>. Date accessed: 20 aug. 2018. doi: http://dx.doi.org/10.26417/ejmn.v2i1.p12-17.