Malaysia’s Healthcare Expenditure: ARDL Bound Test

Abstract

This study aims to analyse the relationships between income level, education expenditure, inflation, and ageingpopulation towards health expenditure in   over the period of 1997 until 2017. This study employs Autoregressive Distributed-Lag (ARDL) Bound test in determining the long-run empirical relationships betweenall independent variables and healthcare  expenditures in Malaysia. The findings show the existence of long runcointegration between  healthcare expenditure inflation, income level, and the government’s education expenditure. The results confirmed that all independent variables have positive long run relationships, except the
ageing population that displays a negative relationship in influencing healthcare expenditure in Malaysia. The regression result of GDPP shows income elasticity value of 0.690, reflecting the necessity of healthcare expenditure. The outcome of the paper hopes to provide insights on the importance of healthcare expenditure for
the development of this country, especially on its economic fronts.