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Granger causality between Health and Economic Growth in oil exporting countries

Author(s): Mohsen Mehrara | Maysam Musai

Journal: Interdisciplinary Journal of Research in Business
ISSN 2046-7141

Volume: 1;
Issue: 8;
Start page: 103;
Date: 2011;
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Keywords: Money Supply | Real GDP | Inflation | Granger Causality | Panel Cointegration

This paper examine the causal relationship between the health expenditure and the GDP in a panel of 11 selected oil exporting countries by using panel unit root tests and panel cointegration analysis. A three variable model is formulated with oil revenues as the third variable. The results show a strong causality from oil revenues and economic growth to health expenditure in the oil exporting countries. Yet, health spending doesnot have any significant effects on GDP in short- and long-run. The findings imply high vulnerability of oildependent countries to oil revenues volatility. To insulate the economy from oil revenue volatility requires institutional mechanisms de-linking health expenditures decisions from current revenue.

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