Estimating the Relationship between Economic Growth and Health Expenditures in ECO Countries Using Panel Cointegration Approach

  • Nahid Hatam Department of Health Services Management, School of Management and Medical Information, Shiraz University of Medical Sciences, Shiraz, Iran.
  • Sogand Tourani Hospital Management Research Center (HMRC), Iran University of Medical Sciences, Tehran, Iran.
  • Enayatollah Homaie Rad Department of Health Services Management, School of Management and Medical Information, Shiraz University of Medical Sciences, Shiraz, Iran.
  • Peivand Bastani Department of Health Services Management, School of Management and Medical Information, Shiraz University of Medical Sciences, Shiraz, Iran.
Keywords: ECO countries, Health expenditures, Economic growth, Unit root test, Co-integration test, Panel data

Abstract

Increasing knowledge of people about health leads to raising the share of health expenditures in government budget continuously; although governors do not like this rise because of budget limitations. This study aimed to find the association between health expenditures and economic growth in ECO countries. We added health capital in Solow model and used the panel cointegration approach to show the importance of health expenditures in economic growth. For estimating the model, first we used Pesaran cross-sectional dependency test, after that we used Pesaran CADF unit root test, and then we used Westerlund panel cointegration test to show if there is a long-term association between variables or not. After that, we used chaw test, Breusch-Pagan test and Hausman test to find the form of the model. Finally, we used OLS estimator for panel data. Findings showed that there is a positive, strong association between health expenditures and economic growth in ECO countries. If governments increase investing in health, the total production of the country will be increased, so health expenditures are considered as an investing good. The effects of health expenditures in developing countries must be higher than those in developed countries. Such studies can help policy makers to make long-term decisions.

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Published
2016-03-12
How to Cite
1.
Hatam N, Tourani S, Homaie Rad E, Bastani P. Estimating the Relationship between Economic Growth and Health Expenditures in ECO Countries Using Panel Cointegration Approach. Acta Med Iran. 54(2):102-106.
Section
Original Article(s)