Wagner's Law Tes t on Health Expenditure in Iran

Health expenditure and its relationship with Gross Domestic Product (GDP) have always been one of the cases of study in the framework of economic subjects. Wagner's Law is a theory that argues about this relationship and briefly, it says public sector increases when the GDP begins to grow in one country. This article, according to Wagner law, examines the relationship between health spending and GDP in Iran.

In order to investigate the relationship between the two variables, Toda-Yamamoto and Cointegration causality methods were used. The study period included the years 1980 to 2016. The results of Todayamamato causality method showed that there is a statistically causal relationship between the two variables.

The Johansson coefficient showed that there was a positive relationship between GDP and health expenditure.

In other words, an increase in GDP led to an increase in health spending, so Wagner law was approved for health expenditure in Iran.