A Study of the Asymmetric Consequences of Oil Price Volatilities on the Government Expenditure in the Health Sector in Iran

Examining the government’s attitude towards the allocation of financial slack to the health sector in the positive and negative changes of the oil prince after the health public policy is of great importance. Therefore, the aim of this study is to investigate the asymmetric consequences of oil price volatilities on the government expenditure in the health sector during the years 1375 to 1392 in Iran.
To examine the asymmetric effects of oil price volatilities on government expenditure in the health sector, first using the GARCH model, the positive and negative volatilities in the oil price is measured, and then by employing the econometrics approach of Bayesian methods and the Response Functions, the effects of each of the positive and negative volatilities on the government expenditure will be examined.
Findings: The results reveal that both in the time of the rise and drop of the oil price, the government has increased the expenditure in the health sector and this indicates the important position of the health sector as one of the important Human Development Indexes in the public policies regarding the resource allocation in the aforesaid era.
Oil price volatilities act as one of the agents behind instability in supplying the government income resources in the budgets. As a consequence, supplying the expenses of the health sector as one of the influential factors on the human development indexes might face the instabilities by the government. For this purpose, this study reveals that the government in the aforesaid era has attempted not to be instable in allocating resources to this sector.