Testing for structural breaks in panel varying coefficient models: with an application to OECD health expenditure

Liu, Dandan; Li, Rui; Wang, Zijun

doi:10.1007/s00181-010-0375-6

Cited by 36 publications

(35 citation statements)

References 29 publications

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“…In this regard, it should be noted from Table 1 that most studies obtained income elasticity of demand for health care around 1.1-1.4 or even more. Besides Newhouse's (1977) seminal paper, for example, Leu (1986), Parkin et al (1987), Gerdtham et al (1992a, b), Hitiris (1997), Roberts (2000), Mehrara et al (2010), Liu et al (2011), Hui-Kuang et al (2011 and Woodward and Wang (2012). However, Gerdtham et al (1998) estimated coefficients around 0.2-0.9, as was also found by Sen (2005), Chakroun (2010), Baltagi and Moscone (2010) and Farag et al (2012).…”

Section: Literature Reviewsupporting

confidence: 62%

“…Based on recent papers focused on testing for structural breaks in panel data models (i.e. Liu et al, 2011) -and from a graphic outlook in order to homogenize the evolution for the 14 countries -we split the sample time into four subperiods: 1971subperiods: -1975subperiods: , 1976subperiods: -1991subperiods: , 1992subperiods: -2001subperiods: and 2002subperiods: -2009 Table A1 in the 'Appendix' section). 9 Afterwards, to give greater statistical reliability to the estimates, we only consider two long periods: 1971-1990 and 1991-2009. Table 7 reports the results for income elasticity of health expenditure when performing specification (iii).…”

Section: Elasticity Across Countriesmentioning

confidence: 99%

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Disentangling the heterogeneous income elasticity and dynamics of health expenditure

2014

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In this article, we empirically study the impact of per capita income on health-care expenditure and its dynamics over time in a sample of 14 OECD countries for the period 1971 to 2009. A simple model, built upon one developed by Newhouse (1977), suggests that health care is a necessity in the short run but it cannot be rejected to be a luxury good in the long run. Our findings provide strong empirical evidence that a year's health expenditure is conditioned by the previous one. Interestingly, our results reveal increasing income inelasticity over time along with huge heterogeneity across countries. Finally, this article supports the hypothesis of conditional convergence in health-care spending among countries. In designing policies which facilitate the sustainability of national health systems, we emphasize that ceteris paribus the greater the participation of public health, the lower the growth rate of health spending. High share of children and elderly over working age population opposite influences. We also provide evidence that technological progress could reduce the long-run income elasticity for health care, which in turn threaten the sustainability of health-care systems.

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Section: Literature Reviewsupporting

confidence: 62%

Section: Elasticity Across Countriesmentioning

confidence: 99%

Disentangling the heterogeneous income elasticity and dynamics of health expenditure

2014

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“…Estimates of income elasticities range from close to zero and below one (Di Matteo 2003;Baltagi and Moscone 2010;Freeman 2012) to higher than one (Ang 2010;Liu et al 2010), depending on the choice of test statistics, whether or not deterministic trends are included and/or structural breaks allowed for, the sample of countries, etc.…”

Section: Literature Reviewmentioning

confidence: 99%

The relationship between healthcare expenditure and disposable personal income in the US states: a fractional integration and cointegration analysis

et al. 2017

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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 and nonlinearity of both series are found to vary considerably across states, while 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 expenditure suggests that health care is 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 suggests that health care is a necessity good instead. The implications of these results for health policy are also discussed.

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“…Previous results suggested that the income elasticity estimate depends on the countries reviewed, the time period and the estimation method. Lago-Penas et al (2013) highlighted evidence on both sides of the debate: in the past health care has been found to be both a "luxury" good with an income elasticity greater than one (Liu, et al, 2011;Mehrara, et al, 2010;Parkin, et al, 1987;Leu, 1986;Newhouse, 1977), and a "necessity" with an income elasticity less than one (Baltagi & Moscone, 2010;Chakroun, 2009;Sen, 2005;Gerdtham et al, 1998;Gerdtham, 1992). The review also identified research suggesting that the income elasticity for national HE could be close to 1 (Gerdtham, 1992;Hitiris & Posnett, 1992).…”

Section: Non-demographic Characteristics: Incomementioning

confidence: 99%

What Determines the Health Care Expenditure of High Income Countries? A Dynamic Estimation

Feng¹,

Charlesworth²,

Marsden³

et al. 2017

AEF

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Constraining the rise in costs continues to be a major focus of health care policy in high income countries. It is important for governments to understand what is driving the rise in health care expenditure and what the impact will be over the coming years. This paper aims to provide an alternative econometric model to ascertain the determinants of health expenditure. Data from the OECD and IMS data bases for 18 OECD countries between 1988 and 2012 is collected. The analysis is at the year and country level. This study applies three methods: (1) panel data models with country fixed effects; (2) a first difference model; (3) a Vector Error Correction Model to account for the long run and short run effects as well as the endogeneity of the explanatory variables. The empirical results suggest that the use of different econometric specifications has a significant impact on both establishing the determinants of health expenditure and their magnitudes. Based on results from the Vector Error Correction Model, the GDP is considered as the only driver for country level health care expenditure growth. A 1% increase in the GDP is associated with a 1.1% increase in the health care expenditure.

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Testing for structural breaks in panel varying coefficient models: with an application to OECD health expenditure

Abstract: Panel data, Structural break, Varying coefficient model, Model selection, OECD health expenditure, C14, C23, I10,

Cited by 36 publications

References 29 publications

Disentangling the heterogeneous income elasticity and dynamics of health expenditure

Disentangling the heterogeneous income elasticity and dynamics of health expenditure

The relationship between healthcare expenditure and disposable personal income in the US states: a fractional integration and cointegration analysis

What Determines the Health Care Expenditure of High Income Countries? A Dynamic Estimation

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