The Impact of Health Expenses on Economic Growth: Empirical Evidence from SAARC Countries

Abstract

This study seeks to empirically explore the influence of health expenditure on economic growth in SAARC countries. Gross domestic product (GDP) the proxy variable of economic growth has been used as a dependent variable and current health expenses (CHE) as the independent variable. The panel dynamic OLS (DOLS), panel fully modified OLS (FMOLS), panel OLS, panel co inte gration test, along with Granger causality test have been used to determine the link between health expenses and economic growth. The result presented that health expenses and economic growth have a bidirectional causa l relationship in the short run. The f indings of the panel fully modified OLS (FMOLS) also showed that long run economic growth is increasingly and significantly affected by health expenses, HDI, infant mortality, and life expectancy. Therefore, this st udy presents empirical evidence to the po licymakers of SAARC nations that increasing health expenditures contribute to a country's economic growth.