Investigating the Causal Relationship between Public Health Expenditure and Health Status; Panel Vector Auto-Regression Model

Health is one of the factors affecting human capital, economic growth and development. Considering the importance of the effect of public health expenditures on health, as well as the increase of the share of public health expenditure on GDP, the aim of this study was to investigate the causality relationship between public health expenditure and health status in upper middle income countries.

The present analytical and causal study was conducted internationally for upper middle income countries. Annual time series data were extracted from the World Bank database for the years 1990–2017. The panel vector self-regression model was estimated and the required tests were performed in Eviews 10 software.

The results show that there is a bidirectional causal relationship between public health spending and health status. Increasing public and private health spending, gross national income, and education spending have a positive effect on increasing life expectancy.

Increasing public health spending leads to improved health and better health results in lower public health spending, so governments' investment in health will lead to improved health, thus adopting policies to increase investment in health infrastructure and technologies, increase services. Public health, subsidies, and national health insurance can help improve the health of society.