The role of inflation and institutional quality in shaping healthcare expenditure: Insights from Asia–Pacific countries

Healthy workers are essential for achieving higher productivity. It is generally believed that people living in developing countries tend to have poorer health, and countries with poor health outcomes are often economically disadvantaged. This study investigates the impact of inflation rate (INF) and institutional quality (IQ) on healthcare expenditure (HCE) in 20 Asia–Pacific countries (9 developed and 11 developing countries) from 1996 to 2022. Current study employed panel autoregressive distributed lag (PARDL)/pooled mean group (PMG), fully modified ordinary least squares (FMOLS), and dynamic ordinary least squares (DOLS) methods for empirical analysis. The findings show that the inflation rate has a positive effect on HCE, indicating that an increase in the general price level significantly raises health costs. Additionally, IQ has a positive impact, emphasizing the importance of good governance for public health. The current study outcomes suggest that the management authorities of these Asia–Pacific countries should focus on implementing effective monetary and fiscal policies to mitigate inflationary pressures and cultivate conducive governance frameworks to improve public health. Moreover, as per the results of the study, the developing countries have to focus more on controlling inflation and improving governance for better health outcomes.