The Effect of Public Health Expenditures on Economic Growth and It's Indirect Effects on Private Consumption in Iran: A Supply Side Approach

Health has important effects on economic growth by increasing ability of human resources. The better health makes more effective humans. Nowadays governments are faced by remarkable amount of budget on health sector. The purpose of this paper is to examine the effects of health expenditures on economic growth and private consumption in Iran. The period of study has measured by using co-integration test and Ordinary Least Squares (OLS) method in 1974 to 2007 interval. Augmented Dickey-Fuller Test indicates that health expenditures, economic growth and consumption are static in 5 % confidence level. Durbin-Wattson test shows no auto-correlation. The results illustrate statistically significant and positive relation between health expenditures and economic growth in Iran, while the effects of health expenditures on private consumption are negative.