Effects of air pollution and monetary policy on health expenditure with a sustainable development approach in the European Union

Document Type : Research Paper

Authors

1 Department of Economics, University of Sistan and Baluchestan, Zahedan, Iran

2 Department of Mathematics, National Institute of Applied Sciences, Rennes, France

10.22124/cjes.2025.8566

Abstract

Demographic, social, and economic factors, along with financing arrangements and the organizational structure of the health system, shape a country's health expenditure and its evolution over time. The COVID-19 pandemic had a significant impact on Europe’s health expenditure in 2020. This study aims to examine the effects of air pollution and monetary policy on healthcare expenditure in European countries within the framework of sustainable development during the COVID-19 crisis. To achieve this, spatial panel models are used to analyze the 2005–2020 panel data of 27 countries. The results indicate that the average air pollution index negatively affects healthcare expenditure. In contrast, GNI, Broad Money (M3), CPI, and the Death rate positively impact healthcare expenditure. Based on these empirical findings, if EU governments aim to guide the expansion of the healthcare system through a more government-driven monetary policy, they should revise their air pollution regulations accordingly.

Keywords

References

An, J & Heshmati, A 2019, The relationship between air pollutants and healthcare expenditure: empirical evidence from South Korea. Environmental Science and Pollution Research, 26: 31730-51.
Anselin, L 2002, Under the hood issues in the specification and interpretation of spatial regression models. Agricultural Economics, 27: 247-67.
Anselin, L 2013, Spatial econometrics: methods and models (Vol. 4). Springer Science & Business Media.
Apergis, N, Gupta, R, Lau, CKM & Mukherjee, Z 2018, US state-level carbon dioxide emissions: does it affect health care expenditure? Renewable and Sustainable Energy Reviews, 91: 521-30.
Arnold, IJ 2022, Monetary overhang in times of covid: evidence from the euro area. Applied Economics, 54: 4030-42.
Baicker, K 2005, The spillover effects of state spending. Journal of Public Economics, 89: 529-44.
Baltagi, BH & Moscone, F 2010, Health care expenditure and income in the OECD reconsidered: Evidence from panel data. Economic Modelling, 27: 804-811.
Baltagi, BH, Song, SH & Koh, W 2003, Testing panel data regression models with spatial error correlation. Journal of Econometrics, 117: 123-50.
Baum, CF 2006, An introduction to modern econometrics using Stata. Stata Press.
Berger, MC & Messer, J 2002, Public financing of health expenditures, insurance, and health outcomes. Applied Economics, 34: 2105-2113.
Blackburn, K, Bose, N & Capasso, S 2012, Tax evasion, the underground economy and financial development. Journal of Economic Behavior & Organization, 83: 243-253.
Caporale, GM, Cunado, J, Gil-Alana, LA & Gupta, R 2018, The relationship between healthcare expenditure and disposable personal income in the US states: A fractional integration and cointegration analysis. Empirical Economics, 55: 913-35.
Case, AC, 1991, Spatial patterns in household demand. Econometrica: Journal of the Econometric Society, 59: 953-65.
Case, AC, Rosen, HS & Hines Jr, JR 1993, Budget spillovers and fiscal policy interdependence: Evidence from the states. Journal of Public Economics, 52: 285-307.
Chireshe, J & Ocran, MK 2020, Financial development and health care expenditure in Sub Saharan Africa Countries. Cogent Economics & Finance, 8: 1771878.
Coccia, M 2020, Factors determining the diffusion of COVID-19 and suggested strategy to prevent future accelerated viral infectivity similar to COVID. Science of the Total Environment, 729: 138474.
Coccia, M 2021, High health expenditures and low exposure of population to air pollution as critical factors that can reduce fatality rate in COVID-19 pandemic crisis: A global analysis. Environmental Research, 199: 111339.
COVID, O 2021, Well-Being: Life in the Pandemic. In: OECD Publishing: Paris, France.
EEA, 2021, Air pollution: how it affects our health. Retrieved from https://www.eea.europa.eu/themes/air/health-impacts-of-air-pollution.
EEA 2020, Healthy environment, healthy lives: How the environment influences health and well-being in Europe. In: Publications Office of the European Union Luxembourg.
ECB 2021, Retrieved from https://www.ecb.europa.eu/home/search/coronavirus/html/index.en.html
Europe Sustainable Development Report 2021, Retrieved from https://www.sdgindex.org/reports/europe-sustainable-development-report-2021/.
Fernandes, N 2020, Economic effects of coronavirus outbreak (COVID-19) on the world economy.
Fotheringham, A S & Rogerson, P A 2008, The SAGE handbook of spatial analysis. Sage.
Golgher, AB, Voss, PR 2016, How to interpret the coefficients of spatial models: Spillovers, direct and indirect effects. Spatial Demography, 4: 175-205.
Hao, Y, Liu, S, Lu, Z-N, Huang, J & Zhao, M 2018, The impact of environmental pollution on public health expenditure: dynamic panel analysis based on Chinese provincial data. Environmental Science and Pollution Research, 25: 18853-18865.
Hartwig, J & Sturm, J-E 2014, Robust determinants of health care expenditure growth. Applied Economics, 46: 4455-4474.
Hsiao, C 2007, Panel data analysis advantages and challenges. Test, 16: 1-22.
Ibrahim, IA, Ötvös, T, Gilmanova, A, Rocca, E, Ghanem, C & Wanat, M 2021, International energy agency. Kluwer Law International BV.
Jalal, S & Khan, NU 2015, Situational analysis of the impact of GNI on the elderly population. Ageing International, 40: 70-79.
Jerrett, M, Eyles, J, Dufournaud, C & Birch, S 2003, Environmental influences on healthcare expenditures: an exploratory analysis from Ontario, Canada. Journal of Epidemiology & Community Health, 57: 334-338.
Kelejian, HH & Prucha, IR 1999, A generalized moments estimator for the autoregressive parameter in a spatial model. International Economic Review, 40: 509-533.
Khan, JR, Awan, N, Islam, M & Muurlink, O 2020, Healthcare capacity, health expenditure, and civil society as predictors of COVID-19 case fatalities: a global analysis. Frontiers in Public Health, 8: 347.
Khoshnevis Yazdi, S & Khanalizadeh, B 2017, Air pollution, economic growth and health care expenditure. Economic Research-Ekonomska Istraživanja, 30: 1181-1190.
Lee, LF & Yu, J 2010, A spatial dynamic panel data model with both time and individual fixed effects. Econometric Theory, 26: 564-597.
Manski, CF 1993, Identification of endogenous social effects: The reflection problem. The Review of Economic Studies, 60: 531-542.
McMillen, DP 2003, Spatial autocorrelation or model misspecification? International Regional Science Review, 26: 208-17.
Moscone, F & Knapp, M 2005, Exploring the spatial pattern of mental health expenditure. Journal of Mental Health Policy and Economics, 8: 205.
Musgrove, P 1996, Public and private roles in health: Theory and financing patterns. Health Policy and Planning, 11: 1-15.
Narayan, PK & Narayan, S 2008, Does environmental quality influence health expenditures? Empirical evidence from a panel of selected OECD countries. Ecological Economics, 65: 367-374.
NASA 2020, NASA Volcanoes and climate change. Retrieved from https://earthdata.nasa.gov/learn/sensing-our-planet/volcanoes-and-climate-change.
Newhouse, JP 1977, Medical-care expenditure: a cross-national survey. The Journal of Human Resources, 12: 115-25.
Novignon, J, Olakojo, SA & Nonvignon, J 2012, The effects of public and private health care expenditure on health status in sub-Saharan Africa: new evidence from panel data analysis. Health Economics Review, 2: 1-8.
Rahimzadeh, F & Ebrahimi, BP 2021, Evaluating the effects of language on international trade in MENA countries: A gravity-model approach. Journal of Research in Emerging Markets, 3: 48-62.
Rahman, MM, Khanam, R & Rahman, M 2018, Health care expenditure and health outcome nexus: New evidence from the SAARC-ASEAN region. Globalization and Health, 14: 1-11.
Report, ESD 2021, Retrieved from https://www.sdgindex.org/reports/europe-sustainable-development-report-2021/.
Russell, LB 1975, The effects of inflation on federal health spending. Medical Care, 13: 713-721.
Sabat, I, Neuman-Böhme, S, Varghese, N.E, Barros, PP, Brouwer, W, van Exel, J & Stargardt, T 2020, United but divided: Policy responses and people’s perceptions in the EU during the COVID-19 outbreak. Health Policy, 124: 909-918.
Sghari, MBA & Hammami, S 2013, Relationship between health expenditure and GDP in developed countries. IOSR Journal of Pharmacy, 3: 41-45.
Shen, JS, Wang, Q & Shen, HP 2021, Does industrial air pollution increase health care expenditure? Evidence from China. Frontiers in Public Health, 9: 632.
Stepovic, M 2019, GDP growth and health care expenditures worldwide. The Open Pharmacoeconomics & Health Economics Journal, 7: 21-30.
Taşkaya, S & Demirkiran, M 2016, Environmental determinants of life expectancy at birth in Turkey. International Journal of Research in Medical Sciences, 4: 995.
Tollefson, J 2021, Carbon emissions rapidly rebounded following COVID pandemic dip. Nature, 600: 383.
Turgut, M, Ağırbaş, İ & Aldoğan, U 2017, Relationship between health expenditure and inflation in Turkey. Akademik Sosyal Araştırmalar Dergisi, 5: 289-299.
Usman, M, Ma, Z, Wasif Zafar, M, Haseeb, A & Ashraf, RU 2019, Are air pollution, economic and non-economic factors associated with per capita health expenditures? Evidence from emerging economies. International Journal of Environmental Research and Public Health, 16: 1967.
Vezhnovets, TA, Gurianov, VG, Prus, NV, Korotkyi, OV & Antonyuk, OY 2021, Health care expenditures of 179 countries with different GNI per capita in 2018. Wiadomosci Lekarskie, 74: 678-683.
Virts, JR & Wilson, GW 1984, Inflation and health care prices. Health Affairs, 3: 88-100.
Yahaya, A, Nor, NM, Habibullah, MS, Ghani, JA & Noor, ZM 2016, How relevant is environmental quality to per capita health expenditures? Empirical evidence from panel of developing countries. Springer Plus, 5: 1-14.
Yang, J & Zhang, B 2018, Air pollution and healthcare expenditure: Implication for the benefit of air pollution control in China. Environment International, 120: 443-455.
Zaidi, S & Saidi, K 2018, Environmental pollution, health expenditure and economic growth in the Sub-Saharan Africa countries: Panel ARDL approach. Sustainable Cities and Society, 41: 833-40.
Zeinali Ghasemi, Z, Mousavi, SN & Najafi, B 2020, Effects of implementation of green tax on environmental pollutants’ dispersion on macroeconomic variables: application of multi-regional general equilibrium model. Caspian Journal of Environmental Sciences, 18: 181-192.
Caspian Journal of Environmental Sciences
Volume 23, Issue 1
January 2025
Pages 131-145

Files

Share

How to cite

Statistics