The Causal relationship between Infant mortality rate, Health expenditure and Economic growth in India.
Keywords:
Infant mortality rate, Private Health Expenditure (% GDP), Per Capita Gross Domestic Product (PCGDP), Cointegration and Granger Causality.Abstract
Background: The Infant Mortality Rate defined as the risk for a live born child to die before its first birthday is known to be one of the most sensitive and commonly used indicators of the social and economic development of a nation. Method: This paper investigates the causal relationship between infant mortality rate, economic growth and private health expenditure (% GDP) in India using the cointegration and Granger causality frameworks for the period from 1995 to 2013. We examine the presence of a long-run equilibrium relationship using the bounds testing approach to cointegration within the Unrestricted Error- Correction Model (UECM). Moreover, we examine the direction of causality between infant mortality rate, economic growth and private health expenditure (% GDP) in India using the Granger causality test within the Vector Error-Correction Model (VECM). Results:As a summary of the empirical findings, we find the Infant Mortality Rate (IMR), Per capita gross domestic product (PCGDP) and private health expenditure (% GDP) are cointegrated. The results of Granger Causality suggest that no short-run effect was existing between all the three variables. The error-correction term implies that the variable is non-explosive and long-run equilibrium relationship is attainable. Conclusion: The study indicates that as per capita gross domestic product and private health expenditure increases, infant mortality rate decreases.
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