Is Wagner's theory relevant in explaining health expenditure in Botswana?

Abstract

This study tests the relevance of the Wagner’s theory in explaining the health expenditure in Botswana. There is no consensus yet when it comes to the causality relationship between health expenditure and economy. At the moment, there are four dominant schools of thought explaining the causality relationship between health expenditure and economy. The first school of thought is that health expenditure spurs the economy whilst the second school of thought says that the economy drives health expenditure. The third school of thought maintains that there is a feedback effect between health expenditure and the economy whilst the fourth mentions that there is no causality at all between the two variables. However, this study found out that there is no causality relationship between health expenditure and GDP in Botswana thereby dismissing the relevance of the Wagner’s theory.