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THE RELATIONSHIP BETWEEN HEALTH DEVELOPMENT INDEX AND FINANCIAL DEVELOPMENT INDEX: EVIDENCE FROM HIGH INCOME COUNTRIES

Year 2017, Volume: 2 Issue: 2, 83 - 95, 29.12.2017
https://doi.org/10.30784/epfad.346935

Abstract

Economic growth is a complex
process affected by many factors at different levels which is commonly proxied
by health. In this study, the causal between health and financial development
is investegated using heteregenuis panel causality test over the period
1991-2014. To this end, Principal component analysis is initially applied to
construct indexes for each variable. Results show that health development
indexgranger causes financial development index.  

References

  • Altay, B., & Topcu, M. (2017). Re-Examining the Impact of Financial System on Economic Growth: New Evidence From Heterogeneous Regional Panels. In Handbook of Research on Global Enterprise Operations and Opportunities (pp. 1-16). IGI Global.
  • Arrow, K. (1962). Economic Welfare and the Allocation of Resources for Invention. In The rate and direction of inventive activity: Economic and social factors (pp. 609-626). Princeton University Press.
  • Barro, R. J. (1990). Government Spending in a Simple Model of Endogeneous Growth. Journal of political economy 98(5, Part 2): S103-S125.
  • Barro, R. J. (1991). Economic Growth in a Cross Section of Countries. The quarterly journal of Economics 106(2): 407-443.
  • Breuer, J. B., McNown, R., & Wallace, M. (2002). Series‐Specific Unit Root Tests with Panel Data. Oxford Bulletin of Economics and statistics 64(5): 527-546.
  • Lluís Carrion‐i‐Silvestre, J., Barrio‐Castro, D., & López‐Bazo, E. (2005). Breaking the Panels: an Application to the GDP per capita. The Econometrics Journal 8(2): 159-175.
  • Choi, I. (2001). Unit Root Tests for Panel Data. Journal of international money and Finance 20(2): 249-272.
  • Çoban, S., & Topcu, M. (2013). The Nexus Between Financial Development and Energy Consumption in the EU: A Dynamic Panel Data Analysis. Energy Economics 39: 81-88.
  • Dumitrescu, E. I., & Hurlin, C. (2012). Testing for Granger Non-causality in Heterogeneous Panels. Economic Modelling 29(4): 1450-1460.
  • Elmi, Z. M., & Sadeghi, S. (2012). Health Care Expenditures and Economic Growth in Developing Countries: Panel Co-integration and Causality. Middle-East Journal of Scientific Research 12(1): 88-91.
  • Gerdtham, U. G., & Jönsson, B. (1991). Price And Quantity in İnternational Comparisons of Health Care Expenditure. Applied Economics 23(9): 1519-1528.
  • Grossman, M. (1972). On The Concept Of Health Capital And The Demand For Health. Journal of Political economy 80(2): 223-255.
  • Grossman, M. (1999). The human capital model of the demand for health (No. w7078). National Bureau of Economic Research.
  • Hansen, P., & King, A. (1996). The Determinants Of Health Care Expenditure: A Cointegration Approach. Journal of health economics 15(1): 127-137.
  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing For Unit Roots in Heterogeneous Panels. Journal of econometrics 115(1): 53-74.
  • Kaldor, N., & Mirrlees, J. A. (1962). A New Model Of Economic Growth. The Review of Economic Studies 29(3): 174-192.
  • Levine, R. (1997). Financial Development And Economic Growth: Views And Agenda. Journal of economic literature 35(2): 688-726.
  • Lucas, R. E. (1988). On The Mechanics Of Economic Development. Journal of monetary economics 22(1): 3-42.
  • Maddala, G. S., & Wu, S. (1999). A Comparative Study Of Unit Root Tests With Panel Data And A New Simple Test. Oxford Bulletin of Economics and statistics 61(S1): 631-652.
  • Masih, M., Al-Elg, A., & Madani, H. (2009). Causality Between Financial Development And Economic Growth: An Application Of Vector Error Correction And Variance Decomposition Methods To Saudi Arabia. Applied Economics 41(13): 1691-1699.
  • Mehrara, M., & Musai, M. (2011). Granger causality between Health and Economic Growth in oil exporting countries. Interdisciplinary Journal of Research in Business 1(8): 103-108.
  • Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial Development, Trade Openness And Economic Growth in African Countries: New Insights From A Panel Causality Approach. Economic Modelling 37: 386-394.
  • Mushkin, S. J. (1962). Health as an Investment. Journal of political economy, 70(5, Part 2):129-157.
  • Narayan, P. K., & Narayan, S. (2013). The Short-Run Relationship Between The Financial System And Economic Growth: New Evidence From Regional Panels. International Review of Financial Analysis 29: 70-78.
  • Newhouse, J. P. (1977). Medical-care expenditure: a cross-national survey. The Journal of Human Resources 12(1): 115-125.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and statistics 61(S1): 653-670.
  • Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross‐section Dependence. Journal of Applied Econometrics 22(2): 265-312.
  • Rebelo, S. (1991). Long-Run Policy Analysis and Long-Run Growth. Journal of Political Economy 99(3): 500-521.
  • Romer, P. M. (1986). Increasing Returns and Long-Run Growth. Journal of political economy 94(5): 1002-1037.
  • Saci, K., & Holden, K. (2008). Evidence on Growth and Financial Development Using Principal Components. Applied Financial Economics 18(19): 1549-1560.
  • Shahbaz, M., Shahzad, S. J., Ahmad, N., & Alam, S. (2016). Financial Development and Environmental Quality: The Way Forward. Energy Policy 98: 353-364.
  • Soukiazis, E., & Cravo., T. (2008). Human Capital and The Convergence Process Among Countries. Review of Development Economics 12(1): 124-142.
  • Tang, C. F. (2011). Multivariate Granger Causality and the Dynamic Relationship Between Health Care Spanding, Income and Relative Price of Health Care in Malaysia. Hitotsubashi Journal of Economics, 52(2): 199-214.
  • Taylor, M. P., & Sarno., L. (1998). The Behavior of Real Exchange Rates During The Post-Bretton Woods Period. Journal of International Economics 46(2): 281-312.
  • Topcu, M., & Çoban, S. (2017). Financial Development and Firm Growth in Turkish Manufacturing Industry: Evidence From Heterogeneous Panel Based Non-Causality Test. Economic Research-Ekonomska Istraživanja 30(1), 1758-1769.
  • Topcu, M., & Payne, J. (2017). The Financial Development–Energy Consumption Nexus Revisited. Energy Sources, Part B: Economics, Planning, and Policy 12(9): 1-9.
  • Uzawa, H. (1965). Optimum Technical Change in An Aggregative Model of Economic Growth. International Economic Review 6:18-31.

THE RELATIONSHIP BETWEEN HEALTH DEVELOPMENT INDEX AND FINANCIAL DEVELOPMENT INDEX: EVIDENCE FROM HIGH INCOME COUNTRIES

Year 2017, Volume: 2 Issue: 2, 83 - 95, 29.12.2017
https://doi.org/10.30784/epfad.346935

Abstract

Economic growth is a complex process affected by many factors at different levels which is commonly proxied by health. In this study, the causal between health and financial development is investegated using heteregenuis panel causality test over the period 1991-2014. To this end, Principal component analysis is initially applied to construct indexes for each variable. Results show that health development indexgranger causes financial development index.  


Ekonomik büyüme, sağlık
değişkeni tarafından sıkça rastlanan farklı seviyelerde birçok faktörden
etkilenen karmaşık bir süreçtir. Bu çalışmada, sağlık ve finansal değişkenler
arasındaki nedensellik ilişkisi 1991-2014 yılları boyunca panel nedensellik testi
kullanılarak araştırılmıştır. Bu amaçla, temel bileşenler analizi
değişkenlerden dizinler elde etmek için başlangıçta uygulanmıştır. Sonuçlar,
sağlık gelişme endeksinin finansal gelişme endeksinin granger nedeni olduğunu
göstermektedir. 

References

  • Altay, B., & Topcu, M. (2017). Re-Examining the Impact of Financial System on Economic Growth: New Evidence From Heterogeneous Regional Panels. In Handbook of Research on Global Enterprise Operations and Opportunities (pp. 1-16). IGI Global.
  • Arrow, K. (1962). Economic Welfare and the Allocation of Resources for Invention. In The rate and direction of inventive activity: Economic and social factors (pp. 609-626). Princeton University Press.
  • Barro, R. J. (1990). Government Spending in a Simple Model of Endogeneous Growth. Journal of political economy 98(5, Part 2): S103-S125.
  • Barro, R. J. (1991). Economic Growth in a Cross Section of Countries. The quarterly journal of Economics 106(2): 407-443.
  • Breuer, J. B., McNown, R., & Wallace, M. (2002). Series‐Specific Unit Root Tests with Panel Data. Oxford Bulletin of Economics and statistics 64(5): 527-546.
  • Lluís Carrion‐i‐Silvestre, J., Barrio‐Castro, D., & López‐Bazo, E. (2005). Breaking the Panels: an Application to the GDP per capita. The Econometrics Journal 8(2): 159-175.
  • Choi, I. (2001). Unit Root Tests for Panel Data. Journal of international money and Finance 20(2): 249-272.
  • Çoban, S., & Topcu, M. (2013). The Nexus Between Financial Development and Energy Consumption in the EU: A Dynamic Panel Data Analysis. Energy Economics 39: 81-88.
  • Dumitrescu, E. I., & Hurlin, C. (2012). Testing for Granger Non-causality in Heterogeneous Panels. Economic Modelling 29(4): 1450-1460.
  • Elmi, Z. M., & Sadeghi, S. (2012). Health Care Expenditures and Economic Growth in Developing Countries: Panel Co-integration and Causality. Middle-East Journal of Scientific Research 12(1): 88-91.
  • Gerdtham, U. G., & Jönsson, B. (1991). Price And Quantity in İnternational Comparisons of Health Care Expenditure. Applied Economics 23(9): 1519-1528.
  • Grossman, M. (1972). On The Concept Of Health Capital And The Demand For Health. Journal of Political economy 80(2): 223-255.
  • Grossman, M. (1999). The human capital model of the demand for health (No. w7078). National Bureau of Economic Research.
  • Hansen, P., & King, A. (1996). The Determinants Of Health Care Expenditure: A Cointegration Approach. Journal of health economics 15(1): 127-137.
  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing For Unit Roots in Heterogeneous Panels. Journal of econometrics 115(1): 53-74.
  • Kaldor, N., & Mirrlees, J. A. (1962). A New Model Of Economic Growth. The Review of Economic Studies 29(3): 174-192.
  • Levine, R. (1997). Financial Development And Economic Growth: Views And Agenda. Journal of economic literature 35(2): 688-726.
  • Lucas, R. E. (1988). On The Mechanics Of Economic Development. Journal of monetary economics 22(1): 3-42.
  • Maddala, G. S., & Wu, S. (1999). A Comparative Study Of Unit Root Tests With Panel Data And A New Simple Test. Oxford Bulletin of Economics and statistics 61(S1): 631-652.
  • Masih, M., Al-Elg, A., & Madani, H. (2009). Causality Between Financial Development And Economic Growth: An Application Of Vector Error Correction And Variance Decomposition Methods To Saudi Arabia. Applied Economics 41(13): 1691-1699.
  • Mehrara, M., & Musai, M. (2011). Granger causality between Health and Economic Growth in oil exporting countries. Interdisciplinary Journal of Research in Business 1(8): 103-108.
  • Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial Development, Trade Openness And Economic Growth in African Countries: New Insights From A Panel Causality Approach. Economic Modelling 37: 386-394.
  • Mushkin, S. J. (1962). Health as an Investment. Journal of political economy, 70(5, Part 2):129-157.
  • Narayan, P. K., & Narayan, S. (2013). The Short-Run Relationship Between The Financial System And Economic Growth: New Evidence From Regional Panels. International Review of Financial Analysis 29: 70-78.
  • Newhouse, J. P. (1977). Medical-care expenditure: a cross-national survey. The Journal of Human Resources 12(1): 115-125.
  • Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. Oxford Bulletin of Economics and statistics 61(S1): 653-670.
  • Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross‐section Dependence. Journal of Applied Econometrics 22(2): 265-312.
  • Rebelo, S. (1991). Long-Run Policy Analysis and Long-Run Growth. Journal of Political Economy 99(3): 500-521.
  • Romer, P. M. (1986). Increasing Returns and Long-Run Growth. Journal of political economy 94(5): 1002-1037.
  • Saci, K., & Holden, K. (2008). Evidence on Growth and Financial Development Using Principal Components. Applied Financial Economics 18(19): 1549-1560.
  • Shahbaz, M., Shahzad, S. J., Ahmad, N., & Alam, S. (2016). Financial Development and Environmental Quality: The Way Forward. Energy Policy 98: 353-364.
  • Soukiazis, E., & Cravo., T. (2008). Human Capital and The Convergence Process Among Countries. Review of Development Economics 12(1): 124-142.
  • Tang, C. F. (2011). Multivariate Granger Causality and the Dynamic Relationship Between Health Care Spanding, Income and Relative Price of Health Care in Malaysia. Hitotsubashi Journal of Economics, 52(2): 199-214.
  • Taylor, M. P., & Sarno., L. (1998). The Behavior of Real Exchange Rates During The Post-Bretton Woods Period. Journal of International Economics 46(2): 281-312.
  • Topcu, M., & Çoban, S. (2017). Financial Development and Firm Growth in Turkish Manufacturing Industry: Evidence From Heterogeneous Panel Based Non-Causality Test. Economic Research-Ekonomska Istraživanja 30(1), 1758-1769.
  • Topcu, M., & Payne, J. (2017). The Financial Development–Energy Consumption Nexus Revisited. Energy Sources, Part B: Economics, Planning, and Policy 12(9): 1-9.
  • Uzawa, H. (1965). Optimum Technical Change in An Aggregative Model of Economic Growth. International Economic Review 6:18-31.
There are 37 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Makaleler
Authors

Ayhan Kuloğlu

Eyyup Ecevit This is me

Publication Date December 29, 2017
Acceptance Date December 23, 2017
Published in Issue Year 2017 Volume: 2 Issue: 2

Cite

APA Kuloğlu, A., & Ecevit, E. (2017). THE RELATIONSHIP BETWEEN HEALTH DEVELOPMENT INDEX AND FINANCIAL DEVELOPMENT INDEX: EVIDENCE FROM HIGH INCOME COUNTRIES. Ekonomi Politika Ve Finans Araştırmaları Dergisi, 2(2), 83-95. https://doi.org/10.30784/epfad.346935