Modelling Time-Varying Income Elasticities of Health Care Expenditure for the OECD

Publikation: Working paperForskning


  • rp18_29

    Forlagets udgivne version, 1,05 MB, PDF-dokument

  • Isabel Casas, Syddansk Universitet
  • ,
  • Jiti Gao, Monash University, Australien
  • Shangyu Xie, University of International Business and Economics, Kina
Income elasticity dynamics of health expenditure is considered for the OECD and the Eurozone over the period 1995-2014. This paper studies a novel non-linear cointegration model with fixed effects, controlling for cross-section dependence and unobserved heterogeneity. Most importantly, its coefficients can vary over time and its variables can be non-stationary. The resulting asymptotic theory is fundamentally different with a faster rate of convergence to similar kernel smoothing methodologies. A fully modified kernel regression method is also proposed to reduce the asymptotic bias. Results show a steep increase in the income elasticity for the OECD and a small increase for the Eurozone.
UdgiverInstitut for Økonomi, Aarhus Univeritet
Antal sider43
StatusUdgivet - 3 dec. 2018
SerietitelCREATES Research Papers


  • Cross-sectional dependence, Health expenditure, Income elasticity, Nonparametric kernel smoothing, Non-stationarity, Super-consistency

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