Open AccessAn Empirical Analysis on the Relationship between Health Care Expenditures and Economic Growth in the European Union Countries
Author(s) -
Çiğdem Börke Tunalı,
Naci Tolga Saruç
Publication year - 2021
Language(s) - English
Resource type - Journals
ISSN - 2601-8691
DOI - 10.26417/682jde51h
Subject(s) - per capita , economics , gross domestic product , granger causality , econometrics , european union , real gross domestic product , demographic economics , macroeconomics , international trade , demography , population , sociology
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.