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Health care policy uncertainty, real health expenditures and health care inflation in the USA

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  • Chak Hung Jack Cheng

    (University of South Carolina Upstate)

  • Nopphol Witvorapong

    (Chulalongkorn University)

Abstract

Based on a structural VAR model estimated with Bayesian methods over the period of 1985Q1–2017Q1, we investigate the effects of health care policy uncertainty (HCPU) on the US health sector. We find that HCPU exerts a negative and significant impact on the growth rate of real health expenditures and health care inflation. It has an especially persistent effect on health care inflation and explains a generous portion of the post-2007 decline in the growth rate of health care services prices in the USA. HCPU also dampens the growth rate of GDP and general inflation, eliciting cautiousness from economic agents and acting as a negative aggregate demand shock.

Suggested Citation

  • Chak Hung Jack Cheng & Nopphol Witvorapong, 2021. "Health care policy uncertainty, real health expenditures and health care inflation in the USA," Empirical Economics, Springer, vol. 60(4), pages 2083-2103, April.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:4:d:10.1007_s00181-019-01818-x
    DOI: 10.1007/s00181-019-01818-x
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    More about this item

    Keywords

    Health care policy uncertainty; Health expenditure; Health care inflation; Bayesian VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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