The causality relationship between inflation, income and health expenditure

Abstract

BACKGROUND: Health expenditures per capita has been increased substantially over the worldwide. As a result of the increase in health spending, conducting researches to understand the determinants of this change has gained great importance with increases in health spending. However, when the studies on this subject were analyzed, it was observed that researches were generally focused on the gross domestic product per capita and health spending per and the other economic variables were ignored. Therefore, the aim of this study was to determine the causality relationship between health expenditure as a part of the gross domestic product, gross domestic product per capita and the inflation rate in Turkey. METHODS: The empirical modeling of this research was based on how gross domestic product per capita and inflation rates had an impact on health expenditure per capita. Data were gathered from the World Bank Databases and OECD Health Data, 2015 and were included the period from 1975 to 2013. Granger method was used to investigate the causal relationship between variables. Analyses were performed with Eviews 9 software program. RESULTS: At the end of the analysis, it was found out that there is no relationship between gross domestic product per capita, infilation rate, and health expenditure as a part of the gross domestic product. Inflation rate had only an effect on gross domestic product. CONCLUSION: These results are expected to provide evidence base information for understanding the differences occurred in health system and explaining determinants that have an impact on dynamics of health expenditures.