The correlation between economic fluctuation, workforce employment and health expenditure in the BRICS countries

Abstract

In this paper, we use the Fourier ARDL method (data from 2000 to 2019) to examine whether there is a correlation between economic fluctuation, health expenditure, and employment rate among BRICS countries. Fourier ARDL's model, the same as Bootstrap ARDL model, is to test the long-term cointegration relationship of variables; when there is cointegration, it will test whether there is a causal relationship. When there is no cointegration, short-term Granger causality between variables is tested. Our study shows that, in the long-term, whether South Africa takes economic fluctuation, employment rate or health expenditure as the dependent variable, there is a cointegration relationship with the other two independent variables, but the causal relationship is not significant. In short-term Granger causality tests, the effects of economic fluctuation in Brazil, China, and South Africa on health expenditure lag significantly by one period. Economic fluctuation in Brazil, India and China had a negative effect on employment rate, while South Africa had a positive effect. Health expenditure in Russia and India has a negative effect on employment rate, while China has a positive effect. Employment rates in China and South Africa have a significant positive effect on economic fluctuation, while Russia has a negative effect. India's employment rate has a negative effect on health expenditure, while South Africa's has a positive effect. In short-term causality tests, different countries will exhibit different phenomena. Except for economic fluctuation, where health spending is positive, everything else is negatively correlated, and all of them are positive in South Africa. Finally, we make policy recommendations for the BRICS countries on economic fluctuation, employment rates, and health expenditure.

Keywords: BRICS; GDP; economic fluctuation; employment rate; health expenditure.