IDEAS home Printed from https://ideas.repec.org/p/sgc/wpaper/47.html
   My bibliography  Save this paper

A Panel Data Approach for Income-Health Causality

Author

Listed:
  • Erkan Erdil
  • I. Hakan Yetkiner

Abstract

This study provides evidence on income-health causality by employing a large micro panel data set with a VAR representation. The findings verify that dominant type of causality is bidirectional which cast doubt on the performance OLS estimates in the literature. Moreover, one-way causality pattern is not similar for different income groups. One-way causality generally runs from income to health in low- and middle-income countries whereas the reverse holds for high-income countries.

Suggested Citation

  • Erkan Erdil & I. Hakan Yetkiner, 2004. "A Panel Data Approach for Income-Health Causality," Working Papers FNU-47, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2004.
    • Handle: RePEc:sgc:wpaper:47
    as

    Download full text from publisher

    File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/FNU47.pdf
    File Function: First version, 2004
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jong Il Choe, 2003. "Do Foreign Direct Investment and Gross Domestic Investment Promote Economic Growth?," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 44-57, February.
    2. Lant Pritchett & Lawrence H. Summers, 1996. "Wealthier is Healthier," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 841-868.
    3. John Strauss & Duncan Thomas, 1998. "Health, Nutrition, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 766-817, June.
    4. Nancy Devlin & Paul Hansen, 2001. "Health care spending and economic output: Granger causality," Applied Economics Letters, Taylor & Francis Journals, vol. 8(8), pages 561-564.
    5. Henrik Hansen & John Rand, 2006. "On the Causal Links Between FDI and Growth in Developing Countries," The World Economy, Wiley Blackwell, vol. 29(1), pages 21-41, January.
    6. Muysken, Joan & Yetkiner, I. Hakan & Ziesemer, Thomas, 1999. "Health, labour productivity and growth," CCSO Working Papers 200015, University of Groningen, CCSO Centre for Economic Research.
    7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    8. Pedro Pita Barros, 1998. "The black box of health care expenditure growth determinants," Health Economics, John Wiley & Sons, Ltd., vol. 7(6), pages 533-544, September.
    9. Douglas Holtz-Eakin & Whitney K. Newey & Harvey S. Rosen, 1989. "Implementing Causality Tests with Panel Data, with an Example from LocalPublic Finance," NBER Technical Working Papers 0048, National Bureau of Economic Research, Inc.
    10. Berta Rivera & Luis Currais, 1999. "Economic growth and health: direct impact or reverse causation?," Applied Economics Letters, Taylor & Francis Journals, vol. 6(11), pages 761-764.
    11. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    12. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
    13. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-1395, November.
    14. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    15. Diana Weinhold, 2004. "A Dynamic “Fixed Effects” Model for Heterogeneous Panel Data," Econometrics 0410003, University Library of Munich, Germany.
    16. repec:dau:papers:123456789/6159 is not listed on IDEAS
    17. Joseph P. Newhouse, 1977. "Medical-Care Expenditure: A Cross-National Survey," Journal of Human Resources, University of Wisconsin Press, vol. 12(1), pages 115-125.
    18. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    19. Hsiao, Cheng & Mountain, Dean C. & Chan, M. W. Luke & Tsui, Kai Y., 1989. "Modeling Ontario regional electricity system demand using a mixed fixed and random coefficients approach," Regional Science and Urban Economics, Elsevier, vol. 19(4), pages 565-587, December.
    20. Nair-Reichert, Usha & Weinhold, Diana, 2001. "Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-171, May.
    21. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    22. Knowles, Stephen & Owen, P. Dorian, 1995. "Health capital and cross-country variation in income per capita in the Mankiw-Romer-Weil model," Economics Letters, Elsevier, vol. 48(1), pages 99-106, April.
    23. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    24. Knowles, Stephen & Owen, P Dorian, 1997. "Education and Health in an Effective-Labour Empirical Growth Model," The Economic Record, The Economic Society of Australia, vol. 73(223), pages 314-328, December.
    25. Peter Adams & Michael D. Hurd & Daniel L. McFadden & Angela Merrill & Tiago Ribeiro, 2004. "Healthy, Wealthy, and Wise? Tests for Direct Causal Paths between Health and Socioeconomic Status," NBER Chapters, in: Perspectives on the Economics of Aging, pages 415-526, National Bureau of Economic Research, Inc.
    26. Usha Nair‐Reichert & Diana Weinhold, 2001. "Causality Tests for Cross‐Country Panels: a New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-171, May.
    27. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    28. Selma J. Mushkin, 1962. "Health as an Investment," NBER Chapters, in: Investment in Human Beings, pages 129-157, National Bureau of Economic Research, Inc.
    29. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
    30. Selma J. Mushkin, 1962. "Health as an Investment," Journal of Political Economy, University of Chicago Press, vol. 70(5), pages 129-129.
    31. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February.
    32. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gary W. Yohe & Richard S.J. Tol, 2007. "Precaution And A Dismal Theorem: Implications For Climate Policy And Climate Research," Working Papers FNU-145, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
    2. Wei Jiang & Yadong Wang, 2023. "Asymmetric Effects of Human Health Capital on Economic Growth in China: An Empirical Investigation Based on the NARDL Model," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    3. C. S. Verma & Gulnawaz Usmani, 2019. "Relationship Between Health and Economic Growth in India," Indian Journal of Human Development, , vol. 13(3), pages 344-356, December.
    4. Sanwei He & Shan Yu & Lei Wang, 2021. "The nexus of transport infrastructure and economic output in city-level China: a heterogeneous panel causality analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 66(1), pages 113-135, February.
    5. Ali Akbar Fazaeli & Hossein Ghaderi & Masoud Salehi & Ali Reza Fazaeli, 2016. "Health Care Expenditure and GDP in Oil Exporting Countries: Evidence From OPEC Data, 1995-2012," Global Journal of Health Science, Canadian Center of Science and Education, vol. 8(2), pages 1-93, February.
    6. Jye-Shyan Wang & Chih-Fu Cheng & Wen-Jhan Jane, 2014. "Buying success or redistributing payment: bidirectional causality in Korean Professional Baseball League," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 4(2), pages 247-260, December.
    7. Mirzabaev, Alisher & Tsegai, Daniel W., 2012. "Effects of weather shocks on agricultural commodity prices in Central Asia," Discussion Papers 140769, University of Bonn, Center for Development Research (ZEF).
    8. Akkemik, K. Ali & Göksal, Koray, 2012. "Energy consumption-GDP nexus: Heterogeneous panel causality analysis," Energy Economics, Elsevier, vol. 34(4), pages 865-873.
    9. Christine Schleupner & P. Michael Link, 2008. "Eiderstedt im Spannungsfeld zwischen Naturschutz- und Agrarpolitik - Entwicklung eines methodischen Ansatzes für ein nachhaltiges Ressourcenmanagement," Working Papers FNU-168, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2008.
    10. Jane, Wen-Jhan, 2010. "Raising salary or redistributing it: A panel analysis of Major League Baseball," Economics Letters, Elsevier, vol. 107(2), pages 297-299, May.
    11. Samia Nasreen, 2021. "Association between health expenditures, economic growth and environmental pollution: Long‐run and causality analysis from Asian economies," International Journal of Health Planning and Management, Wiley Blackwell, vol. 36(3), pages 925-944, May.
    12. P. Michael Link & C. Ivie Ramos & Uwe A. Schneider & Erwin Schmid & J. Balkovic & R. Skalsky, 2008. "The interdependencies between food and biofuel production in European agriculture - an application of EUFASOM," Working Papers FNU-165, Research unit Sustainability and Global Change, Hamburg University, revised Jul 2008.
    13. Andreas Dietrich, 2012. "Does growth cause structural change, or is it the other way around? A dynamic panel data analysis for seven OECD countries," Empirical Economics, Springer, vol. 43(3), pages 915-944, December.
    14. Serge Mandiefe Piabuo & Julius Chupezi Tieguhong, 2017. "Health expenditure and economic growth - a review of the literature and an analysis between the economic community for central African states (CEMAC) and selected African countries," Health Economics Review, Springer, vol. 7(1), pages 1-13, December.
    15. Ikhlaas Gurrib, 2011. "The Impact of Mining and Services Industries on the Structural Change of Australia," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 4(2), pages 35-51, August.
    16. Aylar Jalili & Hossein Panahi & Sakineh Sojoodi, 2022. "Investigating the causal relationship between woman's health and economic growth in groups D8 and G7 countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(1), pages 359-374, February.
    17. Serap Taskaya & Mustafa Demirkiran, 2016. "The Causality between Healthcare Resources and Health Expenditures in Turkey. A Granger Causality Method," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(2), pages 98-103, April.
    18. Mirzabaev, Alisher & Tsegai, Daniel, 2015. "Effects of weather shocks on wheat prices in Central Asia," 2015 Conference, August 9-14, 2015, Milan, Italy 212466, International Association of Agricultural Economists.
    19. Yusuf, Shahid & Nabeshima, Kaoru & Wei Ha, 2007. "What makes cities healthy ?," Policy Research Working Paper Series 4107, The World Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erkan Erdil & I. Hakan Yetkiner, 2009. "The Granger-causality between health care expenditure and output: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 41(4), pages 511-518.
    2. Jochen Hartwig, 2008. "Has Health Capital Formation Cured 'Baumol's Disease'? - Panel Granger Causality Evidence for OECD Countries," KOF Working papers 08-206, KOF Swiss Economic Institute, ETH Zurich.
    3. Hartwig, Jochen, 2010. "Is health capital formation good for long-term economic growth? - Panel Granger-causality evidence for OECD countries," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 314-325, March.
    4. Weichun Chen & Judith A. Clarke & Nilanjana Roy, 2014. "Health and wealth: Short panel Granger causality tests for developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(6), pages 755-784, September.
    5. Alfredo M. Pereira & Rui M. Pereira & Pedro G. Rodrigues, 2019. "Health care investments and economic performance in Portugal: an industry level analysis," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(6), pages 1174-1200, October.
    6. Andreas Dietrich, 2012. "Does growth cause structural change, or is it the other way around? A dynamic panel data analysis for seven OECD countries," Empirical Economics, Springer, vol. 43(3), pages 915-944, December.
    7. Saten Kumar, 2013. "Systems GMM estimates of the health care spending and GDP relationship: a note," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 503-506, June.
    8. N.M. Odhiambo, 2021. "Health Expenditure and Economic Growth in Sub-Saharan Africa: An Empirical Investigation," Working Papers AESRI-2021-05, African Economic and Social Research Institute (AESRI), revised Jan 2021.
    9. Töngür, Ünal & Elveren, Adem Yavuz, 2014. "Deunionization and pay inequality in OECD Countries: A panel Granger causality approach," Economic Modelling, Elsevier, vol. 38(C), pages 417-425.
    10. Oliver Fritz & Peter Mayerhofer & Reinhard Haller & Gerhard Streicher & Florian Bachner & Herwig Ostermann, 2013. "Die regionalwirtschaftlichen Effekte der österreichischen Krankenanstalten," WIFO Studies, WIFO, number 46672, April.
    11. Nicholas M. Odhiambo, "undated". "Health Expenditure and Economic Growth in sub-Saharan Africa: An Empirical Investigation," Working Papers AESRIWP05, African Economic and Social Research Institute (AESRI).
    12. Hartwig, Jochen, 2012. "Testing the growth effects of structural change," Structural Change and Economic Dynamics, Elsevier, vol. 23(1), pages 11-24.
    13. Ousmane Traoré, 2020. "Economic Growth and Human Capital Accumulation across Countries: Evidence from WAEMU Region," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(2), pages 147-159, May.
    14. 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.
    15. C. S. Verma & Gulnawaz Usmani, 2019. "Relationship Between Health and Economic Growth in India," Indian Journal of Human Development, , vol. 13(3), pages 344-356, December.
    16. Tang, Chor Foon, 2010. "The determinants of health expenditure in Malaysia: A time series analysis," MPRA Paper 24356, University Library of Munich, Germany.
    17. Gyimah-Brempong, Kwabena & Wilson, Mark, 2004. "Health human capital and economic growth in Sub-Saharan African and OECD countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(2), pages 296-320, May.
    18. I. Hakan Yetkiner, 2006. "Saglik ile Buyume," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 6(2), pages 83-91.
    19. Matteo Lanzafame, 2014. "The balance of payments-constrained growth rate and the natural rate of growth: new empirical evidence," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(4), pages 817-838.
    20. Isreal, Akingba Idowu Opeoluwa & Kaliappan, Shivee & Hamzah, Hanny Zurina, 2019. "Impact of Health Capital on Total Factor Productivity in Singapore," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(2), pages 83-98.

    More about this item

    Keywords

    Income; Health; Granger Causality;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sgc:wpaper:47. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Uwe Schneider (email available below). General contact details of provider: https://edirc.repec.org/data/zmhamde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.