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Title: The relationship between healthcare expenditure and disposable personal income in the US states: a fractional integration and cointegration analysis
Authors: Caporale, GM
Cunado, J
Gil-Alana, L
Gupta, R
Keywords: Healthcare expenditure;Income elasticity;US states;Fractional integration;Fractional cointegration
Issue Date: 2017
Publisher: Springer Verlag
Citation: Empirical Economics, (2017)
Abstract: This study examines the relationship between healthcare expenditure and disposable income in the 50 US states over the period 1966-2009 using fractional integration and cointegration techniques. The degree of integration and non-linearity of both series are found to vary considerably across states, whilst the fractional cointegration analysis suggests that a long-run relationship exists between them in only 11 out of the 50 US states. The estimated long-run income elasticity of healthcare expenditure suggests that health care is a luxury good in these states. By contrast, the short-run elasticity obtained from the regressions in first differences is in the range (0,1) for most US states, which suggests that health care is a necessity good instead. The implications of these results for health policy are also discussed.
ISSN: 0377-7332
Appears in Collections:Dept of Economics and Finance Research Papers

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