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The Granger-causality between health care expenditure and output: a panel data approach

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  • Erkan Erdil
  • I. Hakan Yetkiner

Abstract

This study investigates the Granger-causality relationship between real per capita GDP and real per capita health care expenditure by employing a large macro panel data set with a VAR representation. The findings verify that the dominant type of Granger-causality is bidirectional. In instances that we found one-way causality, the pattern is not homogenous: Our analyses show that one-way causality generally runs from income to health in low- and middle-income countries whereas the reverse holds for high-income countries. Accordingly, care must be paid in defining the dependent and independent variables when specifying the determinants of health care expenditure.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:applec:v:41:y:2009:i:4:p:511-518
    DOI: 10.1080/00036840601019083
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