An Outlier-Robust Extreme Bounds Analysis of the Determinants of Health-Care Expenditure Growth

KOF Working Papers No. 307

31 Pages Posted: 3 Aug 2012

See all articles by Jan-Egbert Sturm

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich; CESifo (Center for Economic Studies and Ifo Institute)

Jochen Hartwig

ETH Zurich - Swiss Economic Institute

Date Written: July 1, 2012

Abstract

Hartwig (2008) has presented empirical evidence that the difference between real wage growth and productivity growth at the macroeconomic level is a robust explanatory variable for deflated health-care expenditure growth in OECD countries. In this paper, we test whether this finding is robust to the inclusion of additional covariates, applying different versions of Extreme Bounds Analysis (EBA) to data for 33 OECD countries over the period 1970-2010. As far as it is statistically feasible, all macroeconomic and institutional determinants of health-care expenditure growth that have been suggested in the literature are included in the EBA. Furthermore, we analyse to what extent outliers in the data influence the results using an outlier-robust MM estimator. Our results confirm Hartwig’s earlier finding. A number of additional both covariate- and outlier-robust determinants are also identified.

Keywords: Health-care expenditure, unbalanced growth, Extreme Bounds Analysis, MM estimator, OECD panel

JEL Classification: C12, C23, I10

Suggested Citation

Sturm, Jan-Egbert and Hartwig, Jochen, An Outlier-Robust Extreme Bounds Analysis of the Determinants of Health-Care Expenditure Growth (July 1, 2012). KOF Working Papers No. 307. Available at SSRN: https://ssrn.com/abstract=2122412 or http://dx.doi.org/10.2139/ssrn.2122412

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich ( email )

Zurich
Switzerland

HOME PAGE: http://www.kof.ethz.ch

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, 81679
Germany

HOME PAGE: http://www.cesifo.de

Jochen Hartwig (Contact Author)

ETH Zurich - Swiss Economic Institute ( email )

CH-8092 Zurich
Switzerland

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