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Health and Wealth: Short Panel Granger Causality Tests for Developing Countries

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Abstract

The world has experienced impressive improvements in wealth and health, with, for instance, the world’s real GDP per capita having increased by 180% from 1970 to 2007 accompanied by a 50% decline in infant mortality rate. Healthier and wealthier. Are health gains arising from wealth growth? Or, has a healthier population enabled substantial growth in wealth? The answers to these questions have serious policy implications. We contribute to understanding dynamic links between wealth and health by analyzing the relationship between health (as measured by infant mortality rate) and wealth (as measured by GDP per capita) for a panel of 58 developing countries using quinquennial data covering the period 1960 through 2005. We examine for causal rather than associative links between these fundamental macro measures of economic development. The panel enables us to examine for causal links using several methods that differ in how cross-country and temporal heterogeneity is imposed: cross-country homogeneity with temporal heterogeneity and cross-country heterogeneity with temporal homogeneity. Under the latter case, we consider sensitivity to assuming fixed versus random causal coefficients. In addition, we explore robustness of outcomes to level of economic development (as measured by national income) and inclusion of another covariate (education).

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Bibliographic Info

Paper provided by Department of Economics, University of Victoria in its series Econometrics Working Papers with number 1204.

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Length: 35 pages
Date of creation: 12 Sep 2012
Date of revision:
Handle: RePEc:vic:vicewp:1204

Note: ISSN 1485-6441
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Keywords: infant mortality; per capita GDP; Granger causality; fixed and random causal coefficients;

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  1. Granger Causality Testing With Panel Data
    by Dave Giles in Econometrics Beat: Dave Giles' Blog on 2012-09-13 17:53:00
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Cited by:
  1. João Sousa Andrade & Marta Simões & Adelaide Duarte, 2013. "Despesa Pública em Educação e Saúde e Crescimento Económico: Um Contributo para o Debate sobre as Funções Sociais do Estado," GEMF Working Papers 2013-18, GEMF - Faculdade de Economia, Universidade de Coimbra.

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