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A Time-Series Investigation of the U.S. Real Health Expenditure: Evidence from Nonlinear Unit Root Tests

  • Vasudeva Murthy

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    This paper contributes to the literature on health expenditure studies by applying the non-linear unit root tests formulated recently by Kapetanios et al. (Journal of Econometrics 112(2):359–79, 2003 ) to empirically test whether the U.S. real health expenditure time-series are non-stationary or non-linear and globally stationary during a relatively long period from 1965 to 2009. For comparison purposes, it also reports the results of a battery of traditional linear unit root tests and the Lee and Strazicich’s minimum LM unit root (Review of Economics and Statistics 85(4):1082–1089, 2003 ) test for structural breaks. The empirical findings of the paper show that in the United States during the period under investigation, the real health expenditure time-series are non-stationary in levels. Policy implications of the empirical findings are discussed. Copyright International Atlantic Economic Society 2012

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    File URL: http://hdl.handle.net/10.1007/s11294-012-9374-z
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    Article provided by International Atlantic Economic Society in its journal International Advances in Economic Research.

    Volume (Year): 18 (2012)
    Issue (Month): 4 (November)
    Pages: 429-438

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    Handle: RePEc:kap:iaecre:v:18:y:2012:i:4:p:429-438
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    1. Paresh Kumar Narayan & Seema Narayan, 2008. "The role of permanent and transitory shocks in explaining international health expenditures," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1171-1186.
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    9. Anurag Sharma & Preety Srivastava, 2011. "Does Disaggregation Affect The Relationship Between Health Care Expenditure And Gdp? An Analysis Using Regime Shifts," Australian Economic Papers, Wiley Blackwell, vol. 50(1), pages 27-39, 03.
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    11. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
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    13. Kruse, Robinson, 2008. "A new unit root test against ESTAR based on a class of modified statistics," Hannover Economic Papers (HEP) dp-398, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    14. Narayan, Paresh Kumar, 2006. "Examining structural breaks and growth rates in international health expenditures," Journal of Health Economics, Elsevier, vol. 25(5), pages 877-890, September.
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