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Healthcare expenditures and economic growth: evidence via panel local projections

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  • William Ginn

    (Labcorp, Sr. Economist Data Scientist, Artificial Intelligence)

Abstract

This study investigates the elasticity of healthcare expenditures (HCE) with respect to income growth using a balanced panel of 177 economies from 2001 to 2020. Applying a panel local projections (LP) model, we examine both global and heterogeneous effects across income groups, as defined by the World Bank income classification. The model is further extended to estimate the relationship between income and HCE during changing economic conditions. Accordingly, we find that the elasticity weakens during non-expansionary periods, while high-income countries exhibit a minimal contemporaneous response. In contrast, low-income countries exhibit a heightened contemporaneous response to income fluctuations during non-expansionary phases, revealing a hidden vulnerability to economic growth.

Suggested Citation

  • William Ginn, 2025. "Healthcare expenditures and economic growth: evidence via panel local projections," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 26(6), pages 877-892, August.
    • Handle: RePEc:spr:eujhec:v:26:y:2025:i:6:d:10.1007_s10198-024-01750-7
    DOI: 10.1007/s10198-024-01750-7
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    JEL classification:

    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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