The Relationship between Healthcare expenditures and Disposable Personal Income in the US States: A Fractional Integration and Cointegration Analysis
Guglielmo Maria Caporale,
Juncal Cuñado (),
Luis Gil - Alana () and
Rangan Gupta ()
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Luis Gil - Alana: University of Navarra, Pamplona, Spain
Authors registered in the RePEc Author Service: Luis Alberiko Gil-Alana ()
No 201532, Working Papers from University of Pretoria, Department of Economics
This study examines the relationship between healthcare expenditure and disposable income in the 50 US states over the period 1966-2009 using fractional integration and cointegration techniques. The degree of integration andnon-linearityof both series are found to vary considerably across states, whilst the fractional cointegration analysis suggests that a long-run relationship exists between them in only 11 out of the 50 US states.The estimated long-run income elasticity of healthcare expendituresuggests that healthcareis a luxury good in these states. By contrast, the short-run elasticity obtained from the regressions in first differences is in the range (0,1) for most US states, which suggeststhat healthcareis a necessity good instead. Theimplications of these results for health policy are also discussed.
Keywords: Healthcare expenditure; income elasticity; US states; fractionalintegration; fractionalcointegration (search for similar items in EconPapers)
JEL-codes: C22 C32 H51 I18 (search for similar items in EconPapers)
Pages: 33 pages
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Journal Article: The relationship between healthcare expenditure and disposable personal income in the US states: a fractional integration and cointegration analysis (2018)
Working Paper: The Relationship between Healthcare Expenditure and Disposable Personal Income in the US States: A Fractional Integration and Cointegration Analysis (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201532
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