Revisiting the health-income nexus in Malaysia: ARDL cointegration and Rao's F-test for causality
AbstractThis study re-visits the health-income nexus for Malaysia using alternative econometric techniques which addressed on the small sample problem. This study covers the annual sample period of 1970 to 2009. Based on the appealing small sample properties, we applied the bounds testing approach to cointegration and the system-wise Rao’s F-test with bootstrap simulation procedure in this study. The bounds test suggests that health care expenditure and real income are moving together in the long-run. In addition, the long-run income elasticity is also estimate using four long-run estimators, namely OLS, DOLS, FMOLS, and ARDL. Interestingly, the entire long-run estimators suggest that the long-run income elasticity is more than unity. Therefore, our findings support the health care luxury hypothesis in Malaysia. From policy view point, the system-wise Rao’s F-test reveals strong unilateral causality running from real income to health care expenditure in Malaysia.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 27287.
Date of creation: 2010
Date of revision:
Cointegration; Causality; Health-income nexus; Malaysia; Rao’s F-test;
Find related papers by JEL classification:
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- I10 - Health, Education, and Welfare - - Health - - - General
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