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Health expenditure models: A comparison using panel data

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Author Info

  • Albouy, Valerie
  • Davezies, Laurent
  • Debrand, Thierry

Abstract

In this article, we focus on the estimation of outpatient expenditures with panel data. We model the logarithm of expenditures and consider five different models. The first two are two-part and sample selection cross-section models. Two-part panel data models turn out to be inappropriate for dealing with expenditures. We thus estimate sample selection models with panel data: one without a lagged dependent variable and two with a lagged dependent variable. These two latter models differ in their assumptions on the variance of the residuals. Modelling heteroscedasticity may indeed be important to avoid the bias due to the retransformation problem. We show that lagged dependent variables are important factors for heteroscedasticity. For the models with state dependence, we provide a new solution to the initial conditions problem by controlling for generalised residuals. We establish that panel data models highly improve the correlation explained by the model in the time-series dimension without damaging the fit in the cross-section dimension. For all indicators of fit, the model with state dependence and heteroscedasticity seems to dominate the others.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 4 (July)
Pages: 791-803

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:4:p:791-803

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Health econometrics Expenditures Panel data Selection models;

References

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  17. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
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Citations

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Cited by:
  1. Mohamed Ali Ben Halima & Thierry Debrand, 2011. "Durée d’arrêt de travail, salaire et Assurance maladie : application microéconométrique à partir de la base Hygie," Working Papers DT42, IRDES institut for research and information in health economics, revised Sep 2011.
  2. Toni Mora & Joan Gil & Antoni Sicras-Mainar, 2012. "The influence of BMI, obesity and overweight on medical costs: a panel data approach," Working Papers 2012/37, Institut d'Economia de Barcelona (IEB).

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