Analysis of the relationship between health expenditures and economic growth in G-20 countries

In this work, the data from eight of the G-20 countries (Canada, Germany, Italy, Japan, Republic of Korea, Turkey, England and United States of America), obtained between 1982 and 2017 is used to analyse econometrically the correlation between health expenditures and economic growth. The data analysis of the public health expenditures per capita, the private sector health expenditures per capita and the gross domestic product per capita representing economic growth, between 1980-2017, are used to analyze with STATA 13 package program using STATA codes. In the analysis, firstly the stabilities of the variables were tested with panel unit root tests and it has been observed that all variables are stable in their first differences. Afterwards, the causality relationship between variables was analyzed with the PANEL granger causality test and it is concluded that there is a bidirectional causality relationship between economic growth and both public and private health expenditures, and there is a one directional causality relationship from public health expenditure to private health expenditure. Panel Unit Root Tests are examined in two parts. In the first part, Im, Peseran, Shin (2003) and Fisher based (like ADF and PP tests), individual unit root tests, in the second part, Levin, Lin, Chu (2002); Breitung (2000) and Hadri (2000) unit root tests are used. In the study, the effects of public and private sector health expenditures on economic growth were revealed by variance decomposition and action reaction analysis methods, as well.