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Systems GMM estimates of the health care spending and GDP relationship: a note

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  • Saten Kumar

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    Abstract

    This paper utilizes the systems generalized method of moments (GMM) [Arellano and Bover ( 1995 ) J Econometrics 68:29–51; Blundell and Bond ( 1998 ) J Econometrics 87:115–143], and panel Granger causality [Hurlin and Venet ( 2001 ) Granger Causality tests in panel data models with fixed coefficients. Mime’o, University Paris IX], to investigate the health care spending and gross domestic product (GDP) relationship for organisation for economic co-operation and development countries over the period 1960–2007. The system GMM estimates confirm that the contribution of real GDP to health spending is significant and positive. The panel Granger causality tests imply that a bi-directional causality exists between health spending and GDP. To this end, policies aimed at raising health spending will eventually improve the well-being of the population in the long run. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s10198-012-0394-7
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    Article provided by Springer & Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ) in its journal The European Journal of Health Economics.

    Volume (Year): 14 (2013)
    Issue (Month): 3 (June)
    Pages: 503-506

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    Handle: RePEc:spr:eujhec:v:14:y:2013:i:3:p:503-506
    DOI: 10.1007/s10198-012-0394-7
    Contact details of provider: Web page: http://www.springer.com

    Web page: https://www.dggoe.de/

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    Order Information: Web: http://www.springer.com/medicine/health+informatics/journal/10198/PS2

    Keywords: Health care spending; Gross domestic product; Systems dynamic generalized method of moments; Panel Granger causality; C1; I1;

    Find related papers by JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • I1 - Health, Education, and Welfare - - Health

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    1. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Muysken, Joan & Yetkiner, I. Hakan & Ziesemer, Thomas, 1999. "Health, labour productivity and growth," CCSO Working Papers 200015, University of Groningen, CCSO Centre for Economic Research.
    4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
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    7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    8. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
    9. repec:dau:papers:123456789/6159 is not listed on IDEAS
    10. Hartwig, Jochen, 2010. "Is health capital formation good for long-term economic growth? - Panel Granger-causality evidence for OECD countries," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 314-325, March.
    11. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    12. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    13. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
    14. Selma J. Mushkin, 1962. "Health as an Investment," Journal of Political Economy, University of Chicago Press, vol. 70, pages 129-129.
    15. Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February.
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