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Unified Journal of Economics and International Finance

October 2016 Vol 2(1), pp. 001-010

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Original Research Paper

Health Care Expenditure, Health Outcomes, and Economic Growth Nexus in Nigeria: A Toda Yamamoto Causality Approach

Anne C. MADUKA11, Chekwube V. MADICHIE2* and Chukwunonso S. EKESIOBI1

1Department of Economics, Chukwuemeka Odumegwu Ojukwu University, Igbariam Campus, Nigeria.
2Department of Economics, Nnamdi Azikiwe University, Awka, Nigeria.

Corresponding Author's Email: chekwus_vtus2008@yahoo.com

Accepted 13th September, 2016


Conventional wisdom holds that health is central to human general well-being, as well as a prerequisite for increased productivity, and overall economic growth and development of an economy. This explains why governments across the globe are making enormous efforts to achieve good health for all and Nigeria is no exception. Regrettably, despite government's efforts to improve the health situation of the citizens through massive health care expenditure, the Nigerian health outcomes (such as life expectancy and mortality rate) are still considered one of the poorest and most miserable in the world. Thus, the study follows a causality approach to examining the relationship among government health expenditure, health outcomes, and economic growth in Nigeria during the period 1970 2013. Unlike previous studies that relied on the traditional Granger causality test for such purpose, the study utilizes the approach provided by Toda and Yamamoto (1995) for causality analysis which is based on a modified WALD statistic (?2 distribution). The order of integration of variables was determined using ADF and KPSS while cointegration test was carried out using the Johansen approach. The result of the Johansen cointegration test shows that despite the varying order of integration of variables of the study, they still have longrun equilibrium relationship. The TY causality test revealed that government health expenditures do not directly influence economic growth, but indirectly through health outcomes such as mortality rate and life expectancy. The study therefore concludes that government should always consider health outcomes (mortality rate and life expectancy) whenever policy actions targeted at health care expenditures are meant to drive economic growth.

Keywords: Health Care Expenditure, Economic Growth, Toda-Yamamoto Causality

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Cite This Article

Anne C. MADUKA, Chekwube V. MADICHIE and Chukwunonso S. EKESIOBI. Health Care Expenditure, Health Outcomes, and Economic Growth Nexus in Nigeria: A Toda Yamamoto Causality Approach. Unified Journal of Economics and International Finance. 2(1) 2016 pp. 001-010.

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