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Exploring the technology–healthcare expenditure nexus: a panel error correction approach

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  • Elisabet Rodriguez Llorian

    (University of British Columbia)

  • Janelle Mann

    (University of Manitoba)

Abstract

Technology is perceived as a key factor driving the increase in per capita healthcare expenditure. We assess this effect between 1981 and 2019 for a panel of OECD member countries using a panel error correction model, which was estimated using the dynamic common correlated effect approach of Chudik and Pesaran (J Econom 188(2):393–420, 2015). 10.1016/j.jeconom.2015.03.007. Results corroborate previous findings that medical technology and healthcare expenditure follow a long-run relationship. Incorporating heterogeneity and controlling for cross-sectional dependence and endogeneity reveals substantial variation in medical technology’s effect across OECD member countries. Overall, medical technology is a key factor in driving the increase in per capita healthcare expenditure for less than half of the panel of OECD member countries. This finding is consistent across three different technology proxies and suggests that policymakers should utilize country-specific coefficients to inform decisions.

Suggested Citation

  • Elisabet Rodriguez Llorian & Janelle Mann, 2022. "Exploring the technology–healthcare expenditure nexus: a panel error correction approach," Empirical Economics, Springer, vol. 62(6), pages 3061-3086, June.
    • Handle: RePEc:spr:empeco:v:62:y:2022:i:6:d:10.1007_s00181-021-02125-0
    DOI: 10.1007/s00181-021-02125-0
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    More about this item

    Keywords

    Healthcare expenditure; Medical technology; OECD; Panel cointegration;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I10 - Health, Education, and Welfare - - Health - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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