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Relationship between Health Expenditure and GDP in an Augmented Solow Growth Model for Pakistan: An Application of Co-integration and Error-Correction Modeling

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  • Aurangzeb

    (Research Officer at the Social Policy & Development Centre, (SPDC) Karachi, Pakistan.)

Abstract

This paper examines the temporal interdependence between gross domestic product and health expenditure per capita for Pakistan in an augmented Solow growth model suggested by Mankiw, Romer and Weil (1992) for the period of 1973-2001. This paperis an extension of the MRW model by incorporating health capital proxied by health expenditure to the augmented Solow model. Moreover, an openness variable is also included in the model in order to capture the effect of technological changes on growth. The paper employs co-integration,ECM methodology and several diagnostic and specification tests. The empirical findings show a significant and positive relationship between GDP and Health Expenditure, both in the long- and short-run.

Suggested Citation

  • Aurangzeb, 2003. "Relationship between Health Expenditure and GDP in an Augmented Solow Growth Model for Pakistan: An Application of Co-integration and Error-Correction Modeling," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 8(2), pages 1-16, Jul-Dec.
    • Handle: RePEc:lje:journl:v:8:y:2003:i:2:p:1-16
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    1. Syed Shujaat AHMED & Asif JAVED, 2017. "The Effect of Public Sector Development Expenditures and Investment on Economic Growth: Evidence from Pakistan," Journal of Economics and Political Economy, KSP Journals, vol. 4(2), pages 203-214, June.
    2. Mohammad Mafizur Rahman & Xuan-Binh (Benjamin) Vu & Son Nghiem, 2022. "Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles?," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    3. Wycliffe Obwori Alwago, 2023. "The nexus between health expenditure, life expectancy, and economic growth: ARDL model analysis for Kenya," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(5), pages 1064-1085, June.

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