The Role of Macroeconomic Indicators on Healthcare Cost

Abstract

The progress of healthcare expenses is a striking issue for emerging nations. This is because an uncontrolled increase in healthcare expenses can push the nations to extreme poverty. The study examined the association between public health costs and macro-economic indicators within the emerging economies. Data for the study is extracted from the World Bank World Development Indicators for twenty-one (21) emerging countries spanning from 2000 to 2018. The generalized method of moments (GMM) and the Dumitrescu-Hurlin panel causality test are employed in the analysis of the study. The main findings of the study demonstrate that tax revenue and labor force participation increase public health expenses and inflation, on the other hand, showed a declining relationship. The study further reveals a u-shaped association between public health expenditure and economic growth. The interactive term between research and development and mortality rate of non-communicable diseases, reveal an increasing relationship. The study establishes that, among all the three models estimated, tax revenue, labor force participation and GDP per capita have positive effects on public health costs. Based on the findings, the study recommends governments to embark on policies that improve economic growth and tax revenue as well as stabilizing inflation. These strategic policies could boost public healthcare expenditure since it has a strong association with macroeconomic indicators.