The Impact of Health Expenditures on Economic Growth - Evidence from O.E.C.D. Countries

The paper empirically investigates the relationship between health expenditure and economic growth in the O.E.C.D. countries. The data used is collected twenty five O.E.C.D. countries with ob- servations from 1990 to 2018. For health we have used as proxy the health spending, which measures the final consumption of health care goods and services, while for the economic growth we have used as proxy Gross Domestic Product per capita. A variety of tests for unit roots have been conducted for the stationarity in our panel databases, such Levin-Lin-Chu (2002), Harris-Tzavalis (1999), Breitung (2000); Breitung and Das (2005). In order to determine the effects on GDP per capita of the health expenditure, we have estimated the short run and the long run effects of GDP per capita on health expenditure per capita by using the MG (Pesaran and Smith, 1995) and PMG models (Pesaran, Shin and Smith, 1999) using the methodology proposed by Blackburne and Frank (2007). The empirical results sustain the necessity of using the public policy for increasing the health expenditures, as a premise for economic growth.