CATASTROPHIC HEALTH EXPENDITURE AND MONETARY POLICY IN SUB-SAHARAN AFRICA: A FIXED EFFECT ANALYSIS
CATASTROPHIC HEALTH EXPENDITURE AND MONETARY POLICY IN SUB-SAHARAN AFRICA: A FIXED EFFECT ANALYSIS

Summary/Abstract: Catastrophic health expenditure engenders poverty and generates more illness. Thus, it is a veritable generator of the vicious cycle of poverty. It is common among the low income group prevalent among Africa economies. Studies in this area have, mostly, been among household and scarcely involve macroeconomic policy variables. This study employs panel data methodology to examine the possible impact of monetary policy on catastrophic health expenditure in 44 Sub-Saharan African economies. The p-values of the LM statistic of the test, clearly indicates residuals cross-section correlation in the model at 5% level of significance. Hence a Panel Corrected Standard Error (PCSE) is applied in the estimation of the Fixed Effect Model. Results show that monetary policy is correctly signed and statistically significant in its effect at 5% level of significant, even after being controlled for four other variables, RIMPES, EXR, PRANPW and AGDRO. The study therefore recommends, among others, that expansionary monetary policy option should be explored for now so as to enhance demand for money, such that, catastrophic health expenditure could be mitigated.

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