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Does disaggregation affect the relationship between health care expenditure and GDP? An analysis using regime shifts

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  • Anurag Sharma

    ()
    (Centre for Health Economics, Monash University)

  • Preety Ramful

    ()
    (Centre for Health Economics, Monash University)

Abstract

This paper investigates the impact of policy shifts on disaggregated health expenditure- GDP relationship for Australia and the USA. In contrast to previous studies the disaggregation is at the level of type of service delivered and not at the level of source of expenditure. Our results show that the subcomponents of health expenditure exhibit different patterns of behaviour at both cointegration and unit root stages once policy shifts or structural breaks, such as the introduction of a publically funded medicare policy in the USA, are allowed in the empirical analysis. When the possibility of structural break is allowed we find a significant long run relationship between subcomponents of aggregate health expenditure and GDP that is not found when no break is considered. The underlying reasons for the occurrence of breaks and policy lessons are discussed subsequently..

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File URL: http://www.buseco.monash.edu.au/centres/che/pubs/rp027.pdf
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Bibliographic Info

Paper provided by Monash University, Centre for Health Economics in its series Centre for Health Economics Research Papers with number 27/08.

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Length: 20 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:mhe:cherps:2008-27

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Postal: Centre for Health Economics, Monash University, Building 75, Clayton, Victoria 3800, Australia
Phone: +61-3-9905-0733
Fax: +61-3-9905-8344
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Web page: http://www.buseco.monash.edu.au/centres/che/
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Cited by:
  1. Vasudeva Murthy, 2012. "A Time-Series Investigation of the U.S. Real Health Expenditure: Evidence from Nonlinear Unit Root Tests," International Advances in Economic Research, Springer, vol. 18(4), pages 429-438, November.

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