The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?

Abstract

The well-known health-led growth hypothesis claims a positive correlation between health expenditure and economic growth. The aim of this paper is to empirically investigate the health-led growth hypothesis for the Turkish economy. The bound test approach, autoregressive-distributed lag approach (ARDL) and Kalman filter modeling are employed for the 1975–2013 period to examine the co-integration relationship between economic growth and health expenditure. The ARDL model is employed in order to investigate the long-term and short-term static relationship between health expenditure and economic growth. The results show that a 1 % increase in per-capita health expenditure will lead to a 0.434 % increase in per-capita gross domestic product. These findings are also supported by the Kalman filter model’s results. Our findings show that the health-led growth hypothesis is supported for Turkey.

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Fig. 1

Notes

  1. 1.

    See [31, 32] for details of HTP reforms implemented in the Turkish health system.

  2. 2.

    In order to save space, we report only results of unit root tests. However, other results are available on request. For detailed information about unit root tests (including their null and alternative hypothesis and decision process) [41] or [46] could be used.

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Correspondence to Emre Atilgan.

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Atilgan, E., Kilic, D. & Ertugrul, H.M. The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?. Eur J Health Econ 18, 567–574 (2017). https://doi.org/10.1007/s10198-016-0810-5

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Keywords

  • Health-led growth hypothesis
  • Bound test
  • ARDL model
  • Kalman filter method
  • Turkey

JEL Classification

  • C32
  • I10
  • O12
  • O13