The Relationship Between Aging, Economic Development and Healthcare Expenditure in Japan: An Empirical Analysis

Abstract

This paper investigates the relationship between ageing, economic development, and healthcare expenditure in Japan, considering the challenges posed by an ageing population. The study utilizes a VAR and ARMAX modelling approach to analyse the complex dynamics among these variables. The empirical results reveal interesting findings that contrast with previous literature. While population ageing is often assumed to lead to increased healthcare spending, this study finds no significant correlation between population ageing and healthcare expenditure as a percentage of GDP. The analysis suggests that factors such as advancements in medical technology, healthcare system efficiency, and cultural variations in healthcare utilization patterns may have mitigated the expected rise in healthcare expenditure associated with an ageing population. These findings have implications for policymakers and investors. Policymakers should consider a broader range of factors beyond population ageing when projecting future healthcare expenditures and developing strategies for managing healthcare costs. Investors can benefit from a nuanced understanding of the healthcare sector, focusing on areas such as medical technology, innovation, and healthcare delivery models that are likely to be influenced by population ageing and changing healthcare needs. Overall, this research contributes to the existing knowledge base, offering insights for addressing the challenges of population ageing and healthcare sustainability.