Are Healthcare Expenditures Related to Economic Growth in China? Bootstrap ARDL Approach

Abstract

This study attempts to investigate whether healthcare expenditures (HCE) are related to economic growth in China using a newly developed Bootstrap autoregressive distributed lag (ARDL) test for China over the period of 1990–2019. To avoid omitted variable bias, we use the ratio of the population of 65 years old over the total population (aging ratio) as a control variable. Empirical result indicates that no cointegration among these three variables. Granger causality test based on Bootstrap ARDL model demonstrates that one-way Granger causality running from HCE to aging ratio and from economic growth to both HCE and aging ratio. Empirical results have important policy implications for China understudy