Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data
AbstractThis paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.
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Bibliographic InfoPaper provided by Center for Policy Research, Maxwell School, Syracuse University in its series Center for Policy Research Working Papers with number 120.
Length: 25 pages
Date of creation: Jan 2010
Date of revision:
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Health expenditure; income elasticity; cross section dependence; heterogeneous panels; factor models;
Other versions of this item:
- Baltagi, Badi H. & Moscone, Francesco, 2010. "Health care expenditure and income in the OECD reconsidered: Evidence from panel data," Economic Modelling, Elsevier, vol. 27(4), pages 804-811, July.
- Baltagi, Badi H. & Moscone, Francesco, 2010. "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data," IZA Discussion Papers 4851, Institute for the Study of Labor (IZA).
- 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.
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-23 (All new papers)
- NEP-HEA-2010-01-23 (Health Economics)
- NEP-LTV-2010-01-23 (Unemployment, Inequality & Poverty)
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