NDLI: Nonlinear relationship between health care expenditure and its determinants: a panel smooth transition regression model

Content Provider	Springer Nature Link
Author	Wu, Po Chin Liu, Shiao Yen Pan, Sheng Chieh
Copyright Year	2013
Abstract	This paper employs a panel of 16 OECD countries over the period 1975–2009 to reexamine the health care expenditure (HCE)-income relationship by considering a lagged ratio of public expenditures on health as the transition variable in panel smooth transition regression (PSTR) models. PSTR models can capture the heterogeneity of any individual country, provide more detailed information for policy makers of an individual government, and resolve the insufficient observations problem that frequently appears in annual country-level data. Our empirical results indicate that the relationship between HCE and its determinants, including income, time (trend), and age structure variables, is nonlinear and varies with time and across countries. The time (trend) variable—a proxy for technical progress in health care—has a non-linear impact on HCE. Ignoring the variables—technological change of health care and age structure of population—will result in over-estimates of the income elasticities of HCE. Moreover, HCE behaves as a necessity good, and the income elasticity increases when the five-period lagged ratio of public expenditures on health increases. Clearly, the ratio of government financing on health plays an important role in influencing HCE.
Starting Page	713
Ending Page	729
Page Count	17
File Format	PDF
ISSN	03408744
Journal	Empirica
Volume Number	41
Issue Number	4
e-ISSN	15736911
Language	English
Publisher	Springer US
Publisher Date	2013-09-06
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Panel smooth transition regression (PSTR) model Health care expenditure Time trend Age structure of population Ratio of public expenditures on health European Integration International Economics Macroeconomics/Monetary Economics Econometrics Industrial Organization Public Finance & Economics
Content Type	Text
Resource Type	Article
Subject	Geography, Planning and Development Development Economics and Econometrics

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