I seek to test if there exists any relationship between health expenditure and the growth rate of an economy. The chosen country is Germany and the time period of this study is 1980 to 2021. The Independent variable is GDP per capita and the dependent variable is health expenditure per capita. The log of both variables is taken for further analysis. As it is a time series data, a Basic stationary test of ADF is employed. It is followed by a bound cointegration to find if there is a long-term relationship between the two variables. As there is none, the ARDL model is employed. Tests of robustness and stability are too performed.
As it is an independent project and my first time using Stata, I am struggling with interpretation as well as doubting the models if they are the right way to approach my research question. I wanted to test the causality too but as the ARDL model was statistically insignificant and there was no long-run relationship too as proven by the cointegration, I had my doubts about whether to pursue my research further. I am attaching the do file and dataset for your reference. It will be great if I can get any sort of feedback and assistance.
I am also attaching my parent research paper which motivated me to pursue this methodology.
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