Stylized heterogeneous dynamic links among healthcare expenditures, land urbanization, and CO2 emissions across economic development levels

Highlights: • Integrated healthcare expenditures to STIRPAT model as a component of 'Affluence' • Westerlund's cointegration and dynamic common correlated effects mean group method were applied. • Healthcare expenditures, land urbanization, and CO₂ emissions were interlinked in the long-run. • Bilateral positive causal bond of healthcare expenditures with land urbanization and CO₂ emissions • Unilateral positive (negative) causal bond of land urbanization (squared land urbanization) with CO₂ emissions This research examines the heterogeneous dynamic links among healthcare expenditures, land urbanization, and CO₂ emissions across the development levels of China. To this end, data of 27 Chinese provinces are considered from 1999 to 2018. Theoretically, this research developed a healthcare expenditures-augmented Stochastic Impacts of Regression by Population, Affluence, and Technology (STIRPAT) model to incorporate healthcare expenditures as a determinant of affluence. Empirically, this research established a system of simultaneous equations based on the healthcare expenditures-augmented STIRPAT model to estimate the links among the variables. As a pre-analysis, second-generation Westerlund cointegration is applied and found the long-term equilibrium association among the variables. The long-run estimations and short-run causality are done by employing dynamic common correlated effects mean group method (DCCEMGM) and Dumitrescu-Hurlin causality. A heterogeneous long-run equilibrium linkage is confirmed to exist among the variables of interest. Concerning the long-run estimates, firstly, the healthcare expenditures growth and land urbanization exhibited a bilateral positive link. Secondly, CO₂ emissions and healthcare expenditures growth manifested the existence of a bilateral positive link. And thirdly, a unilateral positive (negative) link is revealed to exist from a linear term (squared term) of land urbanization to CO₂ emissions. Concerning the short-run results, firstly, a bilateral causal bond exists between the land urbanization and healthcare expenditures growth. Secondly, a bilateral causal bond prevails between CO₂ emissions growth and healthcare expenditures growth. Finally, a unilateral causal bond is operational from land urbanization to CO₂ emissions growth. In terms of the nature of the link, the long-run findings are consistent across the data samples. However, considering the degree of influence, heterogeneity is confirmed across the development levels for both long- and short-run. It infers that relatively more (less) developed regions showed relatively strong (weak) influence. Based on empirical findings, relevant policies are recommended.