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On the relationship between GDP and health care expenditure: A new look

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  • Lago-Peñas, Santiago
  • Cantarero-Prieto, David
  • Blázquez-Fernández, Carla

Abstract

In this paper we analyze the relationship between income and health expenditure in 31 Organization for Economic Cooperation and Development (OECD) countries. We focus on the differences between short and long term elasticities and we also check the adjustment process of health care expenditure to changes in per capita Gross Domestic Product (GDP) and its cyclical and trend components. In both cases, we test if results differ in countries with a higher share of private expenditure on total health expenditure. Econometric results show that the long-run income elasticity is close to unity, that health expenditure is more sensitive to per capita income cyclical movements than to trend movements, and that the adjustment to income changes in those countries with a higher share of private health expenditure over total expenditure is faster.

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  • Lago-Peñas, Santiago & Cantarero-Prieto, David & Blázquez-Fernández, Carla, 2013. "On the relationship between GDP and health care expenditure: A new look," Economic Modelling, Elsevier, vol. 32(C), pages 124-129.
  • Handle: RePEc:eee:ecmode:v:32:y:2013:i:c:p:124-129
    DOI: 10.1016/j.econmod.2013.01.021
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    12. Hafiz Muhammad Abubakar Siddique & Ghulam Mohey-ud-din & Adiqa Kiani, 2018. "Health, Education and Economic Growth Nexus: Evidence from Middle Income Countries," Global Social Sciences Review, Humanity Only, vol. 3(4), pages 68-86, December.
    13. Eugene Kouassi & Gnoudentiho G Silue & Oluyele Akinkugbe & Jean Marcelin B Brou, 2017. "Health expenditures and Income with Nonstationary Panel Data: Evidence from ECOWAS Member Countries," Economics Bulletin, AccessEcon, vol. 37(3), pages 2198-2218.
    14. Serdar Kurt, 2015. "Government Health Expenditures and Economic Growth: A Feder–Ram Approach for the Case of Turkey," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 441-447.
    15. Isabel Casas & Jiti Gao & Shangyu Xie, 2018. "Modelling time-varying income elasticities of health care expenditure for the OECD," Monash Econometrics and Business Statistics Working Papers 22/18, Monash University, Department of Econometrics and Business Statistics.
    16. Alejandro F. Rodríguez & M. Nieves Valdés, 2019. "Health care expenditures and GDP in Latin American and OECD countries: a comparison using a panel cointegration approach," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 115-153, June.
    17. Muhammad Arshad Khan & Muhammad Iftikhar Ul Husnain, 2019. "Is health care a luxury or necessity good? Evidence from Asian countries," International Journal of Health Economics and Management, Springer, vol. 19(2), pages 213-233, June.
    18. M. Marković & S. Zdravković & M. Mitrović & A. Radojičić, 2016. "An Iterative Multivariate Post Hoc I-Distance Approach in Evaluating OECD Better Life Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 1-19, March.
    19. Cockx, Lara & Francken, Nathalie, 2014. "Extending the concept of the resource curse: Natural resources and public spending on health," Ecological Economics, Elsevier, vol. 108(C), pages 136-149.
    20. Adem Spahiu, 2018. "An Environment without Barriers," European Journal of Medicine and Natural Scinces Articles, European Center for Science Education and Research, vol. 2, EJMN Janu.
    21. Maciej Lis, 2015. "Red Herring in the Vistula River: Time-to-Death and Health Care Expenditure," IBS Working Papers 13/2015, Instytut Badan Strukturalnych.

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    More about this item

    Keywords

    GDP; Health care expenditure; OECD; Panel data; Income elasticity;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I1 - Health, Education, and Welfare - - Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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