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The Tax Effects of Health Expenditures on Aging Economies: Empirical Evidence on Selected OECD Countries

Pelin Varol İyidoğan (), Eda Balikçioğlu () and H. Hakan Yilmaz ()
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Pelin Varol İyidoğan: Department of Public Finance, Hacettepe University, Ankara, Turkey
Eda Balikçioğlu: Department of Public Finance, Kırıkkale University, Kırıkkale, Turkey
H. Hakan Yilmaz: Department of Public Finance, Ankara University, Ankara, Turkey

Journal for Economic Forecasting, 2017, issue 1, 116-127

Abstract: The aim of our study is twofold: i) we examine the effect of aging on public health expenditures; and ii) investigate the fiscal burden of the health expenditures over the period 1965-2012 for selected OECD countries. As empirical methodology, we perform nonlinear unit root test proposed by Kapetanios et al. (2003). Afterwards, we employ Seo (2006) cointegration test based on a threshold vector error correction model (TVECM). We find evidence supporting the impact of aging population on the public health expenditures, thus on the tax burden for all countries with the exception of Japan, Sweden and the US.

Keywords: health expenditure; aging; tax; cointegration (search for similar items in EconPapers)
JEL-codes: C32 H51 I18 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:rjr:romjef:v::y:2017:i:1:p:116-127