The aim of this study is to explore the symmetric and asymmetric relationship between economic growth, health and environment across G7 countries from 1960 to 2022.
Economic theory suggests that the relationship between economic growth, health and environment tends to be both linear and non-linear. The former relation indicates the presence of symmetries and the latter points to the presence of asymmetries in the system. To analyse the symmetric relationship, this study employs a panel linear autoregressive lag model, while as to analyze the asymmetric relationship, it employs a panel non-linear autoregressive lag model. Panel autoregressive distributed lag (ARDL) and NARDL econometric models capture both short- and long-run dynamics, allowing for heterogeneity across countries and identifying non-linear, asymmetric effects of health and environmental variables on economic growth.
The results confirm the existence of a stable long-run relationship among the variables. Life expectancy and public health expenditure emerge as the strongest drivers of economic growth, while environmental quality also plays a significant role. Population growth has a comparatively smaller positive impact. Country-specific results reveal heterogeneity, with the USA and France exhibiting faster long-run adjustments and Canada, Italy and Germany showing stronger lagged effects of health spending. Asymmetric effects are particularly pronounced for life expectancy and health expenditure, where positive shocks yield larger economic benefits than the adverse impacts of negative shocks.
The findings confirm the presence of asymmetric effects, especially for life expectancy and health expenditure in the context of G7 economies, where positive shocks yield greater economic benefits than the adverse impacts of negative shocks. Overall, the study emphasizes the critical importance of sustained investment in health and the environment to foster resilient and inclusive economic growth.
Improved health outcomes and environmental quality not only enhance economic performance but also contribute to social well-being, equity and sustainability, reinforcing the broader development agenda of G7 countries.
In the context of G7 economies, the relationship between economic growth, health and environment has been analysed in a linear fashion only. To our best knowledge, no research paper has examined this relationship in non-linear fashion, i.e. in the presence of asymmetries. The significance of G7 economies at the global level provides an ideal setting to analyse the asymmetric nexus between economic growth, health and environment. Thereby, this study aims to make a significant contribution to the existing literature.
