Healthcare expenditure and carbon footprint in the USA: evidence from hidden cointegration approach
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ORIGINAL PAPER
Healthcare expenditure and carbon footprint in the USA: evidence from hidden cointegration approach Murat Gündüz1 Received: 13 December 2019 / Accepted: 27 February 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The 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 footprint, 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 cointegration 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 cointegration 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 that there was a one-way long-term asymmetric causality relationship between carbon footprint and healthcare expenditures. As a result of the study, it was proposed that the carbon footprint should be diminished to prevent the increasing burden of the healthcare expenditures on the budget. Keywords Healthcare expenditure · Carbon footprint · Carbon emissions · Environmental quality · Hidden cointegration · Crouching error correction JEL Classification H51 · I18 · C13 · Q51
Introduction There are serious problems in the human–environment relationship. Environmental pollution can be ignored since economic returns are usually prioritized. However, nature has mechanisms to improve itself within its own cycle. As the interest in climate change and global warming is intensified, the issue of the emission of carbon dioxide and other greenhouse gases also constitutes one of the focal points. In order to reduce the effects of climate change, it is aimed at decreasing the emission of these gases and preventing * Murat Gündüz [email protected] 1
Faculty of Economics and Administrative Sciences, Department of Econometrics, Usak University, Usak, Turkey
their damages on the environment as much as possible. In the studies conducted on this issue, carbon footprint has started to be mentioned increasingly [
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