Background: Enhancing economic growth and consequently the growth of economic sub-sectors is one of the important goals of any country and is always considered by policymakers. Accordingly, the present study aimed to examine the impact of permanent and temporary monetary shocks on the value-added of the Iranian health sector.
Materials and Methods: The present study conducted an econometric and time series analysis of the Iranian health sector. The data on the research variables including the value-added of the health sector and the money supply for the period from 1973 to 2011 were received from the Central Bank of the Islamic Republic of Iran. Eviews software (version 8) was used for data analysis and the Blanchard-Quah method and the SVAR model were used to separate permanent and temporary monetary shocks and analyze their effects on the economic growth of the health sector.
Results: The results of the study showed a positive relation between monetary shocks and the growth of the Iranian health sector, with permanent monetary shocks showing the greatest impact. However, monetary shocks had a short-term effect on the value-added of the health sector, so that both types of shocks are moderated after 5 years and their effect disappears. Accordingly, it can be argued that the growth of the money supply had short-term effects on the growth of the health sector.
Conclusion: The findings of this study suggested the adoption of the money supply increase policy in an economy leads to inflation and has no real impact on the growth of the health sector. Therefore, the Iranian central bank must adopt policies to control the money supply in the economy.