Health expenditure and GDP growth - Exploring Granger-causality in Sweden

Sammanfattning: Health care expenditure has been growing rapidly in OECD countries and is expected to continue rising. However, the interaction between health spending and economic growth is not straightforward. Using annual data between 1970 and 2013, this study examines the relationship between per capita health care expenditure and per capita GDP in Sweden. We perform Granger-causality analysis with two-year lag of the natural logarithm of GDP, revealing unidirectional causality from GDP to healthcare expenditure. This suggests that economic growth serves as an enabler of increased health expenditure. Following this, we specify a linear regression model in attempt to determine the effect of GDP growth on health expenditure. We find that GDP remains significant after controlling for population growth, as well as proxies for overall health and age structure. However, due to limitations in our study, we refrain from drawing definite conclusions from this model.