This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

What drives health care expenditure?--Baumol's model of [`]unbalanced growth' revisited

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Hartwig, Jochen

Additional information is available for the following registered author(s):

Abstract

The share of health care expenditure in GDP rises rapidly in virtually all OECD countries, causing increasing concern among politicians and the general public. Yet, economists have to date failed to reach an agreement on what the main determinants of this development are. This paper revisits Baumol's [Baumol, W.J., 1967. Macroeconomics of unbalanced growth: the anatomy of urban crisis. American Economic Review 57 (3), 415-426] model of [`]unbalanced growth', showing that the latter offers a ready explanation for the observed inexorable rise in health care expenditure. The main implication of Baumol's model in this context is that health care expenditure is driven by wage increases in excess of productivity growth. This hypothesis is tested empirically using data from a panel of 19 OECD countries. Our tests yield robust evidence in favor of Baumol's theory.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/B6V8K-4R8MDJH-2/1/8aa6baab8a6820d36950e8ebed543080
File Format:
File Function:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 3 (May)
Pages: 603-623
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:eee:jhecon:v:27:y:2008:i:3:p:603-623

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505560

For technical questions regarding this item, or to correct its listing, contact: (Heidi Boesdal).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Nadim Ahmad & François Lequiller & Pascal Marianna & Dirk Pilat & Paul Schreyer & Anita Wölfl, 2003. "Comparing Labour Productivity Growth in the OECD Area: The Role of Measurement," OECD Science, Technology and Industry Working Papers 2003/14, OECD, Directorate for Science, Technology and Industry. [Downloadable!]
    Other versions:
  2. Tony Culyer, 1989. "Cost-containment in Europe," Working Papers 062chedp, Centre for Health Economics, University of York. [Downloadable!]
  3. Karatzas, George, 2000. "On the Determination of the US Aggregate Health Care Expenditure," Applied Economics, Taylor and Francis Journals, vol. 32(9), pages 1085-99, July. [Downloadable!] (restricted)
  4. Meena Seshamani & Alastair Gray, 2004. "Ageing and health-care expenditure: the red herring argument revisited," Health Economics, John Wiley & Sons, Ltd., vol. 13(4), pages 303-314. [Downloadable!]
  5. Kander, Astrid, 2005. "Baumol's disease and dematerialization of the economy," Ecological Economics, Elsevier, vol. 55(1), pages 119-130, October. [Downloadable!] (restricted)
  6. Newhouse, Joseph P., 1987. "Cross national differences in health spending what do they mean?," Journal of Health Economics, Elsevier, vol. 6(2), pages 159-162, June. [Downloadable!] (restricted)
  7. Gerdtham, Ulf-G. & Sogaard, Jes & Andersson, Fredrik & Jonsson, Bengt, 1992. "An econometric analysis of health care expenditure: A cross-section study of the OECD countries," Journal of Health Economics, Elsevier, vol. 11(1), pages 63-84, May. [Downloadable!] (restricted)
  8. Jochen Hartwig, 2005. "Sind unsere gesamtwirtschaftlichen Probleme überhaupt lösbar?," Working papers 05-112, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  9. Okunade, Albert A & Karakus, Mustafa C, 2001. "Unit Root and Cointegration Tests: Time-Series versus Panel Estimates for International Health Expenditure Models," Applied Economics, Taylor and Francis Journals, vol. 33(9), pages 1131-37, July. [Downloadable!] (restricted)
  10. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August. [Downloadable!] (restricted)
  11. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, vol. 62(1), pages 150, March.
  12. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June. [Downloadable!] (restricted)
  13. Donald G. Freeman, Ph.D., 2003. "Is health care a necessity or a luxury? Pooled estimates of income elasticity from US state-level data," Applied Economics, Taylor and Francis Journals, vol. 35(5), pages 495-502, March. [Downloadable!] (restricted)
  14. Hansen, Paul & King, Alan, 1998. "Health care expenditure and GDP: panel data unit root test results--comment," Journal of Health Economics, Elsevier, vol. 17(3), pages 377-381, June. [Downloadable!] (restricted)
  15. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September. [Downloadable!] (restricted)
  16. Anita Wölfl, 2003. "Productivity Growth in Service Industries: An Assessment of Recent Patterns and the Role of Measurement," OECD Science, Technology and Industry Working Papers 2003/7, OECD, Directorate for Science, Technology and Industry. [Downloadable!]
  17. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April. [Downloadable!] (restricted)
  18. Pedro Pita Barros, 1998. "The black box of health care expenditure growth determinants," Health Economics, John Wiley & Sons, Ltd., vol. 7(6), pages 533-544.
  19. Gerdtham, Ulf-G & Jonsson, Bengt, 1991. "Price and Quantity in International Comparisons of Health Care Expenditure," Applied Economics, Taylor and Francis Journals, vol. 23(9), pages 1519-28, September.
  20. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
  21. Murthy, N R Vasudeva & Ukpolo, Victor, 1994. "Aggregate Health Care Expenditure in the United States: Evidence from Cointegration Tests," Applied Economics, Taylor and Francis Journals, vol. 26(8), pages 797-802, August.
  22. McCoskey, Suzanne K. & Selden, Thomas M., 1998. "Health care expenditures and GDP: panel data unit root test results," Journal of Health Economics, Elsevier, vol. 17(3), pages 369-376, June. [Downloadable!] (restricted)
  23. Breusch, Trevor S & Wickens, Michael R, 1987. "Dynamic Specification, the Long Run and the Estimation of Transformed Regression Models," CEPR Discussion Papers 154, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  24. Milne, R & Molana, H, 1991. "On the Effect of Income and Relative Price on Demand for Health Care: EC Evidence," Applied Economics, Taylor and Francis Journals, vol. 23(7), pages 1221-25, July.
  25. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I. [Downloadable!] (restricted)
  26. Carrion-i-Silvestre, Josep Lluis, 2005. "Health care expenditure and GDP: Are they broken stationary?," Journal of Health Economics, Elsevier, vol. 24(5), pages 839-854, September. [Downloadable!] (restricted)
  27. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July. [Downloadable!] (restricted)
    Other versions:
  28. Gerdtham, Ulf-G. & Jonsson, Bengt, 1991. "Conversion factor instability in international comparisons of health care expenditure," Journal of Health Economics, Elsevier, vol. 10(2), pages 227-234, July. [Downloadable!] (restricted)
  29. Jennifer Roberts, 1999. "Sensitivity of elasticity estimates for OECD health care spending: analysis of a dynamic heterogeneous data field," Health Economics, John Wiley & Sons, Ltd., vol. 8(5), pages 459-472.
  30. Helmut Herwartz & Bernd Theilen, 2003. "The determinants of health care expenditure: testing pooling restrictions in small samples," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 113-124. [Downloadable!]
  31. Kaddour Hadri, 2000. "Testing for stationarity in heterogeneous panel data," Econometrics Journal, Royal Economic Society, vol. 3(2), pages 148-161.
    Other versions:
  32. Getzen, Thomas E., 2000. "Health care is an individual necessity and a national luxury: applying multilevel decision models to the analysis of health care expenditures," Journal of Health Economics, Elsevier, vol. 19(2), pages 259-270, March. [Downloadable!] (restricted)
  33. Eliasson, Gunnar & Henrekson, Magnus, 2003. "William J. Baumol: An Entrepreneurial Economist on the Economics of Entrepreneurship," Working Paper Series in Economics and Finance 532, Stockholm School of Economics. [Downloadable!]
    Other versions:
  34. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February. [Downloadable!] (restricted)
  35. Devlin, Nancy & Hansen, Paul, 2001. "Health Care Spending and Economic Output: Granger Causality," Applied Economics Letters, Taylor and Francis Journals, vol. 8(8), pages 561-64, August. [Downloadable!] (restricted)
  36. Blomqvist, A. G. & Carter, R. A. L., 1997. "Is health care really a luxury?," Journal of Health Economics, Elsevier, vol. 16(2), pages 207-229, April. [Downloadable!] (restricted)
    Other versions:
  37. Jewell, Todd & Lee, Junsoo & Tieslau, Margie & Strazicich, Mark C., 2003. "Stationarity of health expenditures and GDP: evidence from panel unit root tests with heterogeneous structural breaks," Journal of Health Economics, Elsevier, vol. 22(2), pages 313-323, March. [Downloadable!] (restricted)
  38. Gerdtham, Ulf-G. & Lothgren, Mickael, 2000. "On stationarity and cointegration of international health expenditure and GDP," Journal of Health Economics, Elsevier, vol. 19(4), pages 461-475, July. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Badi H. Baltagi & Francesco Moscone, 2009. "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data," Discussion Papers in Economics 09/5, Department of Economics, University of Leicester. [Downloadable!]
  2. Jochen Hartwig, 2008. "Has health capital formation cured ‘Baumol’s Disease’? – Panel Granger causality evidence for OECD countries," Working papers 08-206, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
Statistics
Access and download statistics

Did you know? You may want to explore EconPapers, which displays the same data as IDEAS in a different way.

This page was last updated on 2009-11-7.


This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.