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Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data
by Badi H. Baltagi, Francesco Moscone
(March 2010)
published in: Economic Modelling, 2010, 27 (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.
Text: See Discussion Paper No. 4851  




 

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