Impact of Exchange Rate Uncertainty on Health Expenditures of Urban Households in Iran )1973-2023(

Background: Evidence from Iran’s economy indicates that many economic variables, including household healthcare expenditures, can be influenced by exchange rate uncertainty. Previous studies suggest that exchange rate increases healthcare costs through two channels; general price inflation and higher prices of imported medicines and medical supplies. The present study aims to investigate the impact of unofficial exchange rate uncertainty on urban household healthcare costs in Iran, alongside two other variables: Gross Domestic Product (GDP) and Carbon Dioxide (CO2) emissions. Methods: This applied study utilized time series data to examine the effects of unofficial exchange rate uncertainty, (GDP), and (CO2) emissions on urban household healthcare costs during the period 1971–2023. Data were collected from the Statistical Center of Iran and the Central Bank. The Phillips-Perron and Augmented Dickey-Fuller tests were used to assess data stationarity. Moreover, exchange rate uncertainty was extracted using GARCH method, the research model was estimated via the Fully Modified Ordinary Least Squares (FMOLS) approach, and coefficient stability was evaluated using Hansen’s test. Results: The model estimates revealed that unofficial exchange rate uncertainty had a significant positive effect on Iranian household healthcare costs. A 1% increase in unofficial exchange rate uncertainty led to a 0.36% rise in healthcare expenditures. The corresponding coefficients for (GDP) and (CO2) emissions were 1.3% and 1.07%, respectively. Conclusion: Exchange rate uncertainty contributes to increased healthcare costs and may threaten public health. Therefore, policymakers in macroeconomics and related sectors should adopt measures to reduce exchange rate uncertainty in Iran’s economy, thereby mitigating its adverse effects on societal health.