Healthcare expenditure and carbon footprint in the USA: evidence from hidden cointegration approach

AbstractThe priority aim of this study is to investigate the effect of carbon footprint, which is an indicator of environmental degradation, on health expenditures for the USA. In the study, cointegration analysis was performed for the period 1970 –2016 by using health expenditures, carbon footprint, gross domestic product per capita and life expectancy at birth variables. According to the results of standard cointegration analysis, only cointegration relationship between health expenditures and income was found. In the models with carbon f ootprint, no cointegration relationship was discovered between the original values of the variables. This result was approached with suspicion, and it was thought that there might be a hidden cointegration between healthcare expenditures and carbon footprint. For this purpose, the hidden cointegrati on analysis and crouching error correction model proposed by Granger and Yoon [18] were employed among the positive and negative components of the variables of healthcare expenditures and carbon footprint. The results of the hidden cointegration analysis revealed that there was a hidden cointegratio n relationship between the positive components of healthcare expenditures and the positive components of carbon footprint. Analysis results show that a 1% increase in carbon footprint will cause a 2.04% increase in healthcare expenditures in the long term in the USA. When the positive components of the variables were considered, it was concluded t...
Source: The European Journal of Health Economics - Category: Health Management Source Type: research