Abstract
Background. Given the importance of improving health as a major social goal, and the significance of the exchange rate as one of the key policy variables in open economies, the present study aimed to investigate the impact of dollar price and its volatility on life expectancy in Iran.
Methods. The method employed in this study is causal-analytical and practical research design. The statistics and data related to the variables used in the study were extracted from the Central Bank of Iran's Economic Time Series Database and the World Development Indicators (WDI). The Econometric software used is Eviews version 13 and the econometric methods applied include the Exponential GARCH method and the Johansen-Juselius approach. The data used in the study are quarterly time series, covering the period from the first quarter of 2001 to the fourth quarter of 2023, and the geographical scope of the research is Iran.
Results. The research findings indicate that, in the long run, a one percent increase in both the dollar price and the dollar price volatility leads to a decrease of 0.02 percent and 0.17 percent in life expectancy, respectively.
Conclusion. Based on the findings of the study, it is recommended that economic policymakers take should prioritize actions to increase life expectancy by creating a deep and competitive foreign exchange market and implementing appropriate exchange rate policies aimed at reducing the dollar price and stabilizing it. Furthermore, given that dollar price volatility has a greater impact on life expectancy than the dollar price itself, policymakers should continue to reduce and stabilize dollar price fluctuations in the long term.
Extended Abstract
Background
Health is a key dimension of sustainable development, with improvements in health contributing to progress across political, social, economic, and environmental domains. A healthy population is essential for sustainable development; thus, prioritizing the maintenance, promotion, and expansion of health remains essential. The dual importance of enhancing health as a major social goal and pursuing high economic growth as a primary governmental objective has prompted extensive research into the effects of economic factors on population health. Given Iran's open economy, characterized by heavy reliance on oil exports and imported intermediate goods, the exchange rate emerges as a critical macroeconomic variable. Accordingly, this study investigates the impact of the dollar price and its volatility on life expectancy in Iran.
Methods
This practical study employs a causal-analytical approach. Data were collected from library sources, specifically the Central Bank of Iran's Economic Time Series Database and the World Development Indicators (WDI). The econometric analysis was conducted using EViews version 13 software, with quarterly time-series data spanning the first quarter of 2001 to the fourth quarter of 2023. The spatial scope of the study is Iran. First, dollar price volatility was modeled using the exponential GARCH method. To do so, an ARIMA model for the dollar price was estimated via the Box-Jenkins approach from the first quarter of 2001 to the fourth quarter of 2023. Next, the Johansen-Juselius cointegration method was applied to examine the long-run effects of the dollar price and its volatility on life expectancy. The Breusch-Godfrey and ARCH tests confirmed the absence of serial autocorrelation and detected heteroscedasticity in the residuals. Consequently, the conditional variance equation was estimated using EGARCH, from which dollar price volatility was derived.
Results
The Augmented Dickey-Fuller (ADF) test was used to assess stationarity. At levels, the absolute values of the ADF statistics for the logarithm of life expectancy, logarithm of the dollar price, dollar price volatility, and logarithm of the consumer price index were smaller than the absolute MacKinnon critical values at the 5% significance level. Thus, the null hypothesis of a unit root could not be rejected, indicating that these variables are non-stationary at levels. In the stationarity test related to the first-order difference of the aforementioned variables, the absolute value of the Agumented Dickey-Fuller statistic is larger than the absolute value of the Mackinnon critical values at the 5% significance level, therefore the hypothesis H0 based on the existence of a unit root is rejected and the aforementioned variables are stationary at the first-order difference or in other words I(1). It should be noted that since the data used in the study are seasonal, the HEGY seasonal unit root test was also used to test the stationarity of the variables. The results of this test indicated the existence of a unit root at frequency zero or the existence of a non-seasonal unit root in the variables of logarithm of life expectancy, logarithm of dollar price, dollar price volatility, and logarithm of consumer price index.
The estimation of the Johansen-Josielius cointegration model requires the estimation of a system of equations of the vector autoregressive model, in which obtaining the optimal lag length is one of the prerequisites for estimating the models. Based on the results of determining the optimal lag of the vector autoregressive model using the Schwarz-Bayesian criterion, lag one has been selected as the optimal lag. Also, the results of the trace matrix test statistic and the maximum Eigen value test statistic have indicated the existence of a cointegration vector between the model variables. Finally, the long-term relationship between the model variables is estimated and the normalized vector with respect to the first endogenous variable (dependent variable) has been selected, based on which, in the long run, a one percent increase in each of the variables of the dollar price, dollar price volatility, and the consumer price index causes a decrease of 0.02 percent, 0.17 percent, and 0.43 percent in life expectancy, respectively. In the next step, the vector error correction model is estimated, in which the coefficient of ECM is significant and between zero and negative one, and is equal to -0.02. This number indicates that in each period, 0.02 of the short-term imbalance is adjusted to reach the long-term equilibrium.
Conclusion
Based on the study findings, it is recommended that economic policymakers create a deep, competitive exchange market and implement appropriate exchange policies to reduce the dollar price and stabilize it, thereby contributing to increased life expectancy. Furthermore, the study reveals that dollar price volatility has a greater impact on life expectancy in Iran compared to the dollar price itself. Therefore, policymakers should prioritize reducing dollar price volatility and stabilizing it over the long term.
Practical Implications of Research
According to the results of this research, the magnitude of the impact of dollar price volatility on life expectancy is greater than the magnitude of the impact of the dollar price on life expectancy in Iran. Therefore, it is emphasized that economic policies should be adopted in a way that is in line with reducing dollar price volatility and maintaining its stability for the long term.