The Relationship between Health Expenditures and Economic Growth in G7 Countries

Abstract

The Present study endeavors to examine the relationship between health expenditure and economic growth for the case of G7 countries over the period of 1970 to 2017 except France and Italy which is over the period of 1987 to 2017 due to lack of data from 1970 to 1986. The paper uses modern time – series econometric techniques to test the propositions. Johansen Co-integration, Granger and Toda Yamamoto causality test has been applied to test the existence of long run co-integration and the causality between health expenditure and economic growth. Finding of this study endeavors a positive and statistically significant co-integration for all countries, no causality for the France and Italy, bi-directional causality for Germany and unidirectional causality for other countries from health expenditure to economic growth.