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Is Health Care Necessity or Luxury Good? Panel Data Analysis on the Example of the SEEHN Countries

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  • Sasa Obradovic

    (University of Kragujevac, Serbia)

  • Nemanja Lojanica

    (University of Kragujevac, Serbia)

Abstract

The main goal of this paper is oriented on examining the potential link between economic growth and health expenditure in the South-Eastern European Health Network (SEEHN) countries over the period 1995–2014 by applying panel econometrics. The panel co-integration testing approach and panel VECM are used to investigate the long- and short-run causality between the economic growth, health expenditure and life expectancy (trivariate model). The empirical results show that there is a long-run relationship between the observed variables. It was confirmed that health is a luxury good in the long term, while it is a necessity product in the short term. Finally, it should be noted that economic policy in these countries should be directed to the targeted increase in expenditure on health care, in order to increase overall economic activity. Also, the economic policy should be oriented to adequate combination of public and private financing in health care.

Suggested Citation

  • Sasa Obradovic & Nemanja Lojanica, 2018. "Is Health Care Necessity or Luxury Good? Panel Data Analysis on the Example of the SEEHN Countries," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 16(3 (Fall)), pages 195-214.
    • Handle: RePEc:mgt:youmgt:v:16:y:2018:i:3:p:195-214
    DOI: 10.26493/1854-6935.16.195-214
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    More about this item

    Keywords

    health expenditure; economic growth; South-Eastern Europe;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development

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