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A note on cointegration of health expenditures and income

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  • Zijun Wang

    (Private Enterprise Research Center, Texas A&M University, USA)

  • Andrew J. Rettenmaier

    (Private Enterprise Research Center, Texas A&M University, USA)

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    Abstract

    Utilizing a panel data set of 50 US states, this note investigates nonstationarity and cointegration of health care expenditures and gross state products (GSP). Both the individual state-based method and the recent panel data method are applied. Allowing for structural breaks in the test, we find that health care expenditures and GSP are both nonstationary. The evidence also suggests that the two series form a cointegrating relationship. The income elasticities of health spending vary over states and became smaller in the 1990s. Copyright © 2006 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.1182
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    Bibliographic Info

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

    Volume (Year): 16 (2007)
    Issue (Month): 6 ()
    Pages: 559-578

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    Handle: RePEc:wly:hlthec:v:16:y:2007:i:6:p:559-578

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

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    1. Yoosoon Chang & Joon Y. Park, 2003. "A Sieve Bootstrap For The Test Of A Unit Root," Journal of Time Series Analysis, Wiley Blackwell, Wiley Blackwell, vol. 24(4), pages 379-400, 07.
    2. 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, Elsevier, vol. 22(2), pages 313-323, March.
    3. Garry MacDonald & Sandra Hopkins, 2002. "Unit root properties of OECD health care expenditure and GDP data," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(4), pages 371-376.
    4. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, Elsevier, vol. 15(1), pages 127-137, February.
    5. Blomqvist, A. G. & Carter, R. A. L., 1997. "Is health care really a luxury?," Journal of Health Economics, Elsevier, Elsevier, vol. 16(2), pages 207-229, April.
    6. U. -G. Gerdtham & M. Lothgren, 2002. "New panel results on cointegration of international health expenditure and GDP," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 34(13), pages 1679-1686.
    7. 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, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
    8. Josep Llu�s Carrion-i-Silvestre & Tom�s del Barrio-Castro & Enrique L�pez-Bazo, 2005. "Breaking the panels: An application to the GDP per capita," Econometrics Journal, Royal Economic Society, Royal Economic Society, vol. 8(2), pages 159-175, 07.
    9. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, Econometric Society, vol. 59(6), pages 1551-80, November.
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    Cited by:
    1. Zijun Wang, 2009. "The convergence of health care expenditure in the US states," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(1), pages 55-70.
    2. Nicholas Apergis & Puja Padhi, 2013. "Health expenses and economic growth: convergence dynamics across the Indian States," International Journal of Health Care Finance and Economics, Springer, Springer, vol. 13(3), pages 261-277, December.
    3. Nicholas Apergis, 2013. "Health Expenses: Evidence from the Club Clustering Approach," International Advances in Economic Research, Springer, Springer, vol. 19(4), pages 399-407, November.
    4. Tang, Chor Foon, 2010. "Revisiting the health-income nexus in Malaysia: ARDL cointegration and Rao's F-test for causality," MPRA Paper 27287, University Library of Munich, Germany.
    5. Tang, Chor Foon, 2010. "The determinants of health expenditure in Malaysia: A time series analysis," MPRA Paper 24356, University Library of Munich, Germany.

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