The dynamic relationship between health expenditure and economic growth: is the health-led growth hypothesis valid for Turkey?

The well-known health-led growth hypothesis claims a positive correlation between health expenditure and economic growth. The aim of this paper is to empirically investigate the health-led growth hypothesis for the Turkish economy. The bound test approach, autoregressive-distributed lag approach (ARDL) and Kalman filter modeling are employed for the 1975-2013 period to examine the co-integration relationship between economic growth and health expenditure. The ARDL model is employed in order to investigate the long-term and short-term static relationship between health expenditure and economic growth. The results show that a 1 % increase in per-capita health expenditure will lead to a 0.434 % increase in per-capita gross domestic product. These findings are also supported by the Kalman filter model's results. Our findings show that the health-led growth hypothesis is supported for Turkey.