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

See all articles by Santiago Lago-Peñas

Santiago Lago-Peñas

University of Vigo, GEN (Governance and Economics Research Network)

David Cantarero

University of Cantabria - Department of Economics

Carla Blázquez

University of Cantabria

Date Written: April 3, 2012

Abstract

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

Suggested Citation

Lago-Peñas, Santiago and Cantarero, David and Blázquez, Carla, On the Relationship between GDP and Health Care Expenditure: A New Perspective (April 3, 2012). Instituto de Estudios Fiscales Working Paper No. 4/2012, Available at SSRN: https://ssrn.com/abstract=2033692 or http://dx.doi.org/10.2139/ssrn.2033692

Santiago Lago-Peñas

University of Vigo, GEN (Governance and Economics Research Network) ( email )

Ourense, Ourense 32004
Spain

HOME PAGE: http://webs.uvigo.es/infogen

David Cantarero (Contact Author)

University of Cantabria - Department of Economics ( email )

Av. Los Castros s/n
Santander 39005, Cantabria 39005
Spain

Carla Blázquez

University of Cantabria ( email )

Avda. Los Castros, s/n
Santander 39005
Spain

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