Health care expenditure and income in the OECD reconsidered: Evidence from panel data
Badi Baltagi and
Francesco Moscone
Economic Modelling, 2010, vol. 27, issue 4, 804-811
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 modelled 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.
Keywords: Health; expenditure; Income; elasticity; Cross-section; dependence; Heterogeneous; panels; Factor; models (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:27:y:2010:i:4:p:804-811
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