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Multivariate Granger Causality and the Dynamic Relationship between Health Care Spending, Income and Relative Price of Health Care in Malaysia

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  • Tang, Chor Foon

Abstract

This study employs the Granger causality test within a multivariate cointegration and error-correction framework to investigate the relationship between health care spending, income and relative price in Malaysia. This study covers the annual sample from 1970 to 2009. The main findings of this study are that in the short-run there is uni-directional Granger causality running from relative price to health care spending, while relative price and income are bidirectional Granger causality in Malaysia. In the long-run health care spending and income are bi-directional Granger causality, while there is uni-directional Granger causality running from relative price to health care spending and income. In addition, we also extend the study to examine the dynamic interaction between the variables in the system through the forecast error variance decomposition and impulse response function analyses. In line withth e finding of Granger causality, all the variables behaved endogenously in the long-run. Thus, the variables are Granger-causes each other in the long-run even though there might be deviations in the short-run.

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  • Tang, Chor Foon, 2011. "Multivariate Granger Causality and the Dynamic Relationship between Health Care Spending, Income and Relative Price of Health Care in Malaysia," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(2), pages 199-214, December.
    • Handle: RePEc:hit:hitjec:v:52:y:2011:i:2:p:199-214
    DOI: 10.15057/22028
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    2. Tang, Chor Foon & Tan, Eu Chye, 2015. "Does tourism effectively stimulate Malaysia's economic growth?," Tourism Management, Elsevier, vol. 46(C), pages 158-163.
    3. Dadakas, Dimitrios & Karpetis, Christos & Tatsi, Stevi, 2021. "Trends and Structural Changes in Japanese Post-2011 Agri-Food Trade Flows," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 23.
    4. Sasa Obradovic & Nemanja Lojanica, 2018. "Is Health Care Necessity or Luxury Good? Panel Data Analysis on the Example of the SEEHN Countries," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 16(3 (Fall)), pages 195-214.
    5. Serdar Ozturk & Ebru Topcu, 2014. "Health Expendıtures and Economıc Growth: Evıdence from G8 Countries," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 2(6), pages 256-261, June.
    6. Adeel Saleem & Ghulam Sarwar & Jahanzaib Sultan & Zulfiqar Ali, 2022. "Determinants of Public Healthcare Investment: Cointegration and Causality Evidence from Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 4(2), pages 01-13.
    7. Ayhan KULOĞLU & Eyyup ECEVİT, 2017. "The Relationship Between Health Development Index And Financial Development Index: Evidence From High Income Countries," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 2(2), pages 83-95.
    8. Rahman Olanrewaju Raji, 2020. "Nutrition Intake, Health Status, Education and Economic Growth: A Causality Investigation," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 5(2), pages 79-102, December.
    9. Yong Kang Cheah & Chor Foon Tang, 2017. "Factors Influencing the use of Preventive Medical Care in Malaysia: Evidence from National Health and Morbidity Survey Data," Asian Economic Journal, East Asian Economic Association, vol. 31(2), pages 119-137, June.

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    More about this item

    Keywords

    Causality; Cointegration; Healthcare spending; Growth; Malaysia;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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