Health Capital and a Sustainable Economic-Growth Nexus: A High-Frequency-Data Analysis during COVID-19

Nazlı Ceylan Sungur (), Ece C. Akdoğan and Soner Gökten
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Nazlı Ceylan Sungur: Department of Business Administration, Atılım University, Ankara 06830, Turkey
Ece C. Akdoğan: Department of Banking and Finance, Çankaya University, Ankara 06790, Turkey
Soner Gökten: Department of Business Administration, Başkent University, Ankara 06790, Turkey

Sustainability, 2024, vol. 16, issue 10, 1-31

Abstract: The recent COVID-19 pandemic effectively concretized the vitality of health expenditure and the economic-growth nexus, and the threat of new pandemics make re-examining this relationship a necessity. Consequently, this paper focuses on this nexus for developed OECD countries, paying particular attention to the effects of the COVID-19 pandemic. The use of stock indices as proxy variables for health expenditure and economic growth enabled the examination of this nexus by using high-frequency data and financial econometric techniques, specifically via rolling correlation and bivariate GARCH analyses. The data span 1170 observations between 15 May 2018 and 11 November 2022. Since the research period overlaps with the outbreak of Ukraine–Russia war, additional insights are obtained regarding the effects of the war as well. It was found that an increase in health expenditure leads to a delayed increase in economic growth even in the short term, and this relationship mainly develops during crises such as epidemics, wars, supply chain breakdowns, etc., for developed OECD countries. Given the aging population of developed countries, which will probably deteriorate the health status of those countries in the near future, the increasing political tensions around the globe and the considerations of a global recession highlight the importance and the inevitability of investments in health capital for developed countries as well.

Keywords: COVID-19; health expenditure; economic growth; OECD countries; stock indices; proxy variables (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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