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New panel results on cointegration of international health expenditure and GDP

Author

Summary, in English

This article tests for existence of cointegration between health expenditure and GDP using data from 25 OECD countries for the period 1960-1997. The empirical modelling is based on a heterogeneous bivariate vector error correction panel model that allows for trending data as well as intercepts and trends in the cointegrating relations. Univariate country-by-country and panel unit root tests generally fail to reject the null of a unit root in the health expenditure and GDP variables. Country-by-country results based on the Johansen multivariate likelihood-based inference indicate somewhat mixed results on country-specific cointegration with a rank of one found for 12 countries and a rank of zero for the remaining 13 countries. Application of a new panel test for cointegration rank with higher power than the individual tests indicates that health expenditure and GDP are cointegrated around linear trends.

Publishing year

2002

Language

English

Pages

1679-1686

Publication/Series

Applied Economics

Volume

34

Issue

13

Document type

Journal article

Publisher

Routledge

Topic

  • Business Administration

Status

Published

Research group

  • Social Epidemiology

ISBN/ISSN/Other

  • ISSN: 1466-4283