Investigating the Sustainability of Health Care Spending in IRAN: New Evidence based on the ARDL Approach

Document Type : Original Article

Authors

1 Department of Economics, Faculty of Economics & Social Science, Bu-Ali Sina University, Hamedan, Iran

2 Associate Professor of Economics, Department of Public Management, Faculty of Management, Tehran University

3 M.A of Economics, Department of Economics, Faculty of Economics & Social Science, Bu-Ali Sina University

Abstract

Health expenditure in any economy is one of the most important indicators of human capital development, which has a great impact on labor productivity and economic growth. The associated costs in this section are of great importance from economic point of view as well as investment in human capital. Since in developing countries a significant part of the country’s budget and household income is spent on health expenditures, examining the trend of these expenditures, the amount of resources allocated and identifying the factors affecting it is one of the main challenges. Therefore, the aim of current study is to investigate the sustainability of health expenditures per capita in Iran during the period 1360-1395 using explanatory variables of population, income and rate of inflation. Autoregression with Distributed Lags (ARDL) and Bound test have been used to evaluate the per capita health expenditure. The findings show that health expenditure per capita in Iran has an unstable trend and the existence of a long-term co-integration equation has not been confirmed. Short-term estimates show that income and population ratios have a positive effect, but inflation has negative impact on health expenditures per capita in Iran. Based on the findings of present study, role of government in controlling inflation can have an important effect on improving the quality of human capital in Iran and the implementation of policies to control it is recommended.

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