The relationship between toxic air pollution, health expenditure, and economic growth in the European Union: fresh evidence from the PMG-ARDL model.

Abstract

Air pollution is a danger to economies throughout the European Union. Industry, population expansion, a building boom owing to housing and infrastructure development, increasing vehicle traffic, crowded streets, a lack of availability of clean fuel, and ineffective control programs are the primary causes. Toxic air is a double-edged sword for a country's health since it affects just a tiny fraction of Europe's population. The financial burden and healthcare expenses for people rise when health expenditures rise. The present research looks at how dangerous air levels, healthcare costs, and the expansion of the European Union's economy are all connected. The findings are based on data collected over 29years and account for the abovementioned variables. The results of the unit root test have the significant probability values of all variables: health expenditures (HE), gross domestic product (GDP), nitrous oxides (NOX), and carbon dioxides (CO2) emissions at both level and first difference. We used the Johansen, Kao, and Pedroni cointegration tests to test the null hypothesis of no cointegration to see that sample variables had a long-term association. The PMG-ARDL test was used to get these findings. The results confirmed the significant probability values of dependent variables in long- and short-run results that GDP has a positive and significant effect on health expenditure, while NOX and CO2 emissions have a negative and significant impact on (HE), in the European Union. To verify the results, we applied the robustness test, fully modified OLS (FMOLD), and dynamic OLS (DOLS); the robustness test results validated the PMG-ARDL test results. Environmental pollution (CO2, NOX) has a significant and negative impact on healthcare expenditures and a significant effect on GDP (HE) in the EU region. The findings of this research have implications for a wide range of parties, including those who would examine the link between factors in a study meant to improve air quality, distribute health resources, or develop strategies for economic development.