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A Panel Data Approach for Income-Health Causality

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Abstract

This study provides evidence on income-health causality by employing a large micro panel data set with a VAR representation. The findings verify that dominant type of causality is bidirectional which cast doubt on the performance OLS estimates in the literature. Moreover, one-way causality pattern is not similar for different income groups. One-way causality generally runs from income to health in low- and middle-income countries whereas the reverse holds for high-income countries.

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