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On stationarity and cointegration of international health expenditure and GDP

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  • Gerdtham, Ulf-G.
  • Lothgren, Mickael

Abstract

The recent findings by McCoskey and Selden (1997, Journal of Health Economics, forthcoming) that health expenditure and GDP are stationary are driven by the omission of time trends in their ADF regressions. Since both health expenditure and GDP are trending, this omission raise serious doubts on the validity of their results. We apply recently developed heterogeneous panel tests which indicate that both health expenditure and GDP are nonstationary and cointegrated around linear trends. Additionally, we find weak evidence for the existence of a common cointegrating vector across the OECD countries.
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  • Gerdtham, Ulf-G. & Lothgren, Mickael, 2000. "On stationarity and cointegration of international health expenditure and GDP," Journal of Health Economics, Elsevier, vol. 19(4), pages 461-475, July.
    • Handle: RePEc:eee:jhecon:v:19:y:2000:i:4:p:461-475
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    More about this item

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I10 - Health, Education, and Welfare - - Health - - - General

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