Convergence of Health Care Expenditures across the US States: A Reconsideration

Nicholas Apergis (), Tsangyao Chang, Christina Christou () and Rangan Gupta
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Christina Christou: University of Piraeus, Piraeus, Greece

No 201542, Working Papers from University of Pretoria, Department of Economics

Abstract: Current evidence on the convergence of health care expenditures across the US states into a single convergence club is non-existent. Against this backdrop, we revise this issue using a modified panel unit root test that accounts for smooth structural changes spanning the period of 1966-2009. The results illustrate that the ratio of the individual health care expenditures relative to the cross-sectional average is broken trend-stationary, not only in the aggregate panel, but also across all 50 US states, as indicated by a sequential panel selection method. In addition, the findings also document that the evidence of convergence in health care expenditures is possibly due to the convergence of personal disposable income across the US states. These results are expected to have important policy implications for the US health care market.

Keywords: Health care expenditures; convergence; unit root test; Fourier function; sequential panel selection methodology (search for similar items in EconPapers)
JEL-codes: C23 I11 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2015-06
New Economics Papers: this item is included in nep-hea
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Journal Article: Convergence of Health Care Expenditures Across the US States: A Reconsideration (2017)
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