Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data

Author(s)/Creator(s)

Badi H. Baltagi, Syracuse UniversityFollow
Francesco Moscone, Brunel University

Description/Abstract

This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modeled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.

Document Type

Working Paper

Date

2010

Keywords

Health expenditure, income elasticity, cross section dependence, heterogeneous panels, factor models

Language

English

Series

Working Papers Series

Disciplines

Health Policy

Additional Information

Working paper no. 120

Harvest from RePEc at http://repec.org

Recommended Citation

Baltagi, Badi H. and Moscone, Francesco, "Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data" (2010). Center for Policy Research. 46.
https://surface.syr.edu/cpr/46

Source

Metadata from RePEc

Creative Commons License

This work is licensed under a Creative Commons Attribution 3.0 License.