Association between health expenditures, economic growth and environmental pollution: Long-run and causality analysis from Asian economies

This study examines the association between health expenditures, economic growth (EG) and environmental pollution in Asia both at panel and country level. The separate impact of EG and environmental pollution on public and private health expenditures (PRHEs) are also examined. In doing so the panel cointegration tests with the level break, common correlated effects mean group and heterogeneous panel causality test are employed. The study covers 20 Asian economies and time-period from 1995 to 2017. The results provide evidence in support of a long run association between selected variables. The results explain that EG and environmental pollution are positively associated with total health expenditures as well as with public and PRHEs in all countries. However, the magnitude of environmental pollution coefficient is greater from EG coefficient, thus indicate that environmental pollution is the key determinant in increasing national health expenditures. Causality results demonstrate the existence of two-way causality between health expenditures and EG and unidirectional causality flowing from environmental pollution to health expenditures in Asian economies. Findings of this study have provided some important suggestions to policy makers which can be used to minimize the risk of environmental pollution on health in Asian economies.