Granger causality between total expenditure on health and GDP in OECD: Evidence from the Toda-Yamamoto approach

In this paper, a modified version of the Granger causality test proposed by Toda and Yamamoto is used to investigate causality between GDP and healthcare expenditure in OECD countries. The findings indicate that bidirectional Granger causality is predominant.

► The Toda-Yamamoto approach is used to test causality for co-integrated time-series data. ► Causality between healthcare expenditure and GDP is mostly bilateral. ► The paper highlights the risk of misinterpreting the relationship between GDP and healthcare expenditure.