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Do health expenditures 'catch-up'? Evidence from OECD countries

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  • Paresh Kumar Narayan

    (Department of Accounting, Finance and Economics, Griffith Business School, Queensland, Australia)

Abstract

In this paper, we examine the 'catch-up' hypothesis, that is, whether or not per capita health expenditures of the UK, Canada, Japan, Switzerland, and Spain converge to the per capita health expenditures of the USA over the period 1960-2000. We propose a framework to examine convergence of health expenditures and use recent developments in unit root testing, namely the Lagrange multiplier univariate and panel approaches that allow for at most two structural breaks. Our main finding is that while univariate and panel tests that do not incorporate structural breaks fail to find evidence of convergence, univariate and panel LM tests that allow for structural breaks find strong evidence of convergence of per capita health expenditures of the UK, Canada, Japan, Switzerland, and Spain to that of the USA. Copyright © 2007 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1196
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 16 (2007)
Issue (Month): 10 ()
Pages: 993-1008

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Handle: RePEc:wly:hlthec:v:16:y:2007:i:10:p:993-1008

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  2. 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.
  3. Cutler, David M, 1995. "The Cost and Financing of Health Care," American Economic Review, American Economic Association, vol. 85(2), pages 32-37, May.
  4. Evans, Paul, 1998. "Using Panel Data to Evaluate Growth Theories," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 295-306, May.
  5. 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.
  6. Yutaka Imai, 2002. "Health Care Reform in Japan," OECD Economics Department Working Papers 321, OECD Publishing.
  7. Don Webber, 2002. "Policies to stimulate growth: should we invest in health or education?," Applied Economics, Taylor and Francis Journals, vol. 34(13), pages 1633-1643.
  8. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  9. Junsoo Lee & Mark C. Strazicich, 2004. "Minimum LM Unit Root Test with One Structural Break," Working Papers 04-17, Department of Economics, Appalachian State University.
  10. Bentzen, Jan, 2005. "Testing for catching-up periods in time-series convergence," Economics Letters, Elsevier, vol. 88(3), pages 323-328, September.
  11. Theo Hitiris, 1997. "Health care expenditure and integration in the countries of the European Union," Applied Economics, Taylor and Francis Journals, vol. 29(1), pages 1-6.
  12. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  13. Schmidt, Peter & Phillips, C B Peter, 1992. "LM Tests for a Unit Root in the Presence of Deterministic Trends," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 257-87, August.
  14. Miller, Stephen M. & Upadhyay, Mukti P., 2002. "Total factor productivity and the convergence hypothesis," Journal of Macroeconomics, Elsevier, vol. 24(2), pages 267-286, June.
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Cited by:
  1. Andrea Leiter & Engelbert Theurl, 2012. "The convergence of health care financing structures: empirical evidence from OECD-countries," The European Journal of Health Economics, Springer, vol. 13(1), pages 7-18, February.
  2. Aslan, Alper, 2008. "Türkiye’de Suç Oranları Sürekliliğinin Analizi," MPRA Paper 10610, University Library of Munich, Germany.
  3. Aslan, Alper, 2008. "Convergence of per capita health care expenditures in OECD Countries," MPRA Paper 10592, University Library of Munich, Germany.

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