Causality between Gross Domestic Product and Health Care Expenditure in the Augmented Solow’s Growth Model

  • Almas Heshmati Department of Economics, Room GN702, Sogang University, 35 Baekbeom-ro, Mapo-gu, Seoul 04107 Korea
Keywords: Solow growth model, health care expenditure, GDP, convergence, OECD.


This paper examines conditional convergence of OECD countries in gross domestic product (GDP) and health care expenditure (HCE) per capita. It extends the augmented Solow model by incorporating health capital to explain variations in output and expenditure per capita across countries. The issue of causality between GDP and HCE is investigated. The results show that HCE has positive effect on the economic growth and the speed of convergence. In the HCE model a regression of the speed of convergence on variables determining the rate of convergence show close link to the variables characterising the health care system of sample countries.

Author Biography

Almas Heshmati, Department of Economics, Room GN702, Sogang University, 35 Baekbeom-ro, Mapo-gu, Seoul 04107 Korea

Almas Heshmati is Professor of Economics at the Jönköping University (Sweden) and Sogang University (South Korea). He was professor of Economics at the Korea University, Seoul National University, University of Kurdistan at Hawler, RATIO Institute, Stockholm and MTT Agrifood Research, Helsinki and Research Fellow at the World Institute for Development Economics Research (WIDER), The United Nations University, Helsinki during 2001-2004. From 1998 until 2001, he was an Associate Professor of Economics at the Stockholm School of Economics. He has a Ph.D. degree from the University of Gothenburg (1994), where he held a Senior Researcher position until 1998. His research interests include agricultural economics, development economics, energy economics, industrial organization, labor, globalization, income distribution, productivity, efficiency, growth, health care and capital structure. He is member of the Scientific Committee of the International Conference on Panel Data. His publications include papers in the Agricultural Economics, American Journal of Agricultural Economics, Applied Economics, Applied Financial Economics, Econometric Reviews, Economic Theory, Empirical Economics, European Journal of Operational Research, Global Economy Journal, International Journal of Industrial Organization, International Journal of Production Economics, Journal of Applied Econometrics, Journal of Economic Surveys, Journal of Productivity Analysis, Journal of the World System Research, Scandinavian Journal of Economics, Scandinavian Journal of Educational Research, and Structural Change and Economic Dynamics.


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How to Cite
Heshmati, A. (2018, December 26). Causality between Gross Domestic Product and Health Care Expenditure in the Augmented Solow’s Growth Model. UKH Journal of Social Sciences, 2(2), 19-30.
Research Articles