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Erratum To “What Drives Health Care Expenditure?—Baumol’s Model of ‘Unbalanced Growth’ Revisited” [J. Health Econ. 27 (2008) 603–623]

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In a recent paper, Atanda, Menclova and Reed (2018) use country-level panel data from the OECD and conclude that there is little evidence to support the existence of Baumol’s Cost Disease as an explanation for rising health costs. The result is surprising because Hartwig (2008), using similar data, comes to the opposite conclusion. We show that Hartwig tested an incorrect specification of a key hypothesis. When the correct specification is tested, his result vanishes, invalidating his conclusion. This provides a resolution for the conflict between the two studies.

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  • Akinwande Atanda & W. Robert Reed, 2018. "Erratum To “What Drives Health Care Expenditure?—Baumol’s Model of ‘Unbalanced Growth’ Revisited” [J. Health Econ. 27 (2008) 603–623]," Working Papers in Economics 18/15, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:18/15
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    1. Akinwande Atanda & Andrea Kutinova Menclova & W. Robert Reed, 2018. "Is health care infected by Baumol's cost disease? Test of a new model," Health Economics, John Wiley & Sons, Ltd., vol. 27(5), pages 832-849, May.
    2. Baumol, William J, 1993. "Health Care, Education and the Cost Disease: A Looming Crisis for Public Choice," Public Choice, Springer, vol. 77(1), pages 17-28, September.
    3. Akinwande A. Atanda & Andrea K. Menclova & W. Robert Reed, 2016. "Is Health Care Infected by Baumol’s Cost Disease? Test of a New Model Using an OECD Dataset," Working Papers in Economics 16/04, University of Canterbury, Department of Economics and Finance.
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    Keywords

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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