On the Relationship between GDP and Health Care Expenditure: A New Perspective
Instituto de Estudios Fiscales Working Paper No. 4/2012
23 Pages Posted: 3 Apr 2012
Date Written: April 3, 2012
In this paper we analyze the relationship between income and health expenditure in 31 OECD countries. We focus on the difference between short and long term multipliers and we also check the adjustment process of health care expenditure to changes in per capita GDP and its main components. In both cases we test if results differ in countries with a higher share of private expenditure on total health expenditure. Econometric results show that the long-run multiplier is close to unity, that health expenditure is more sensitive to per capita income cyclical movements than to trend movements, and that those countries with a higher share of private health expenditure fit faster and following a different pattern.
Keywords: GDP, Health care expenditure, OECD, panel data, income elasticity
JEL Classification: H51, I1, I18, I38
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