On stationarity and cointegration of international health expenditure and GDP

Ulf-G. Gerdtham and Mickael Löthgren ()
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Mickael Löthgren: Dept. of Economic Statistics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

No 232, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: The recent findings by McCoskey and Selden (1997, Journal of Health Economics, forthcoming) that health expenditure and GDP are stationary are driven by the omission of time trends in their ADF regressions. Since both health expenditure and GDP are trending, this omission raise serious doubts on the validity of their results. We apply recently developed heterogeneous panel tests which indicate that both health expenditure and GDP are nonstationary and cointegrated around linear trends. Additionally, we find weak evidence for the existence of a common cointegrating vector across the OECD countries.

Keywords: Cointegration; Heterogeneous dynamic panels; Panel unit root test (search for similar items in EconPapers)
JEL-codes: C12 C22 C23 I10 (search for similar items in EconPapers)
Pages: 13 pages
Date: 1998-04-15, Revised 1999-01-29
New Economics Papers: this item is included in nep-ecm, nep-ets, nep-hea and nep-pbe
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Citations: View citations in EconPapers (19)

Published in Journal of Health Economics, 2000, pages 461-475.

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Journal Article: On stationarity and cointegration of international health expenditure and GDP (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0232

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