Is technology still a major driver of health expenditure in the United States? Evidence from cointegration analysis with multiple structural breaks

Vasudeva N. R. Murthy, Natalya Ketenci

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Using a longer span of available time series data and employing powerful unit root and cointegration tests that allow for multiple structural breaks, developed recently by Carrion-i-Silvestre et al. (Econ Theory 25:1754–1792, 2009), Perron and Yabu (J Bus Econ Stat 27:369–396, 2009), Kejriwal and Perron (J Econ 146(1):59–73, 2008; J Bus Econ Stat 28(4):503–522, 2010a; J Time Ser Anal 31:305–328, 2010b) and Maki (Econ Model 29:2011–2015, 2012), this paper empirically investigates, whether technology continues to be a major driver of real per capita health expenditure, along with some control variables such as per capita income and life expectancy, in the United States, during the period 1960–2012. Specifically, the paper applies the most recent cointegration tests under multiple structural breaks and extends the work of Okunade (J Health Econ 21(1):147–159, 2002) with the possibility whether a linear cointegration model with multiple structural breaks would provide a better economic model to quantify the impact of some major determinants of US real per capita health expenditure. This paper presents evidence to show that per capita real income, technology as indicated by four proxy measures and life expectancy at birth are some major drivers of real per capita health expenditure in the United States. Contrary to the available evidence in the literature, the finding of this paper is that the point aggregate income elasticity of health expenditure estimate is less than one, indicating that health care has evolved to become a necessity in the United States. Policy implications of the empirical findings are discussed in the paper.

Original languageEnglish (US)
Pages (from-to)1-22
Number of pages22
JournalInternational Journal of Health Economics and Management
DOIs
StateAccepted/In press - Sep 7 2016

Fingerprint

Health Expenditures
Technology
Motor Vehicles
Life Expectancy
Economic Models
Elasticity
Proxy
Linear Models
Parturition
Delivery of Health Care
Multiple structural breaks
Cointegration analysis
Health expenditures
Health
Bus
Cointegration test
Life expectancy

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)
  • Health Policy

Cite this

@article{47728191bfcd481cb50e23bc5484e0f6,
title = "Is technology still a major driver of health expenditure in the United States? Evidence from cointegration analysis with multiple structural breaks",
abstract = "Using a longer span of available time series data and employing powerful unit root and cointegration tests that allow for multiple structural breaks, developed recently by Carrion-i-Silvestre et al. (Econ Theory 25:1754–1792, 2009), Perron and Yabu (J Bus Econ Stat 27:369–396, 2009), Kejriwal and Perron (J Econ 146(1):59–73, 2008; J Bus Econ Stat 28(4):503–522, 2010a; J Time Ser Anal 31:305–328, 2010b) and Maki (Econ Model 29:2011–2015, 2012), this paper empirically investigates, whether technology continues to be a major driver of real per capita health expenditure, along with some control variables such as per capita income and life expectancy, in the United States, during the period 1960–2012. Specifically, the paper applies the most recent cointegration tests under multiple structural breaks and extends the work of Okunade (J Health Econ 21(1):147–159, 2002) with the possibility whether a linear cointegration model with multiple structural breaks would provide a better economic model to quantify the impact of some major determinants of US real per capita health expenditure. This paper presents evidence to show that per capita real income, technology as indicated by four proxy measures and life expectancy at birth are some major drivers of real per capita health expenditure in the United States. Contrary to the available evidence in the literature, the finding of this paper is that the point aggregate income elasticity of health expenditure estimate is less than one, indicating that health care has evolved to become a necessity in the United States. Policy implications of the empirical findings are discussed in the paper.",
author = "Murthy, {Vasudeva N. R.} and Natalya Ketenci",
year = "2016",
month = "9",
day = "7",
doi = "10.1007/s10754-016-9196-2",
language = "English (US)",
pages = "1--22",
journal = "International Journal of Health Economics and Management",
issn = "2199-9023",
publisher = "Springer Science + Business Media",

}

TY - JOUR

T1 - Is technology still a major driver of health expenditure in the United States? Evidence from cointegration analysis with multiple structural breaks

AU - Murthy, Vasudeva N. R.

AU - Ketenci, Natalya

PY - 2016/9/7

Y1 - 2016/9/7

N2 - Using a longer span of available time series data and employing powerful unit root and cointegration tests that allow for multiple structural breaks, developed recently by Carrion-i-Silvestre et al. (Econ Theory 25:1754–1792, 2009), Perron and Yabu (J Bus Econ Stat 27:369–396, 2009), Kejriwal and Perron (J Econ 146(1):59–73, 2008; J Bus Econ Stat 28(4):503–522, 2010a; J Time Ser Anal 31:305–328, 2010b) and Maki (Econ Model 29:2011–2015, 2012), this paper empirically investigates, whether technology continues to be a major driver of real per capita health expenditure, along with some control variables such as per capita income and life expectancy, in the United States, during the period 1960–2012. Specifically, the paper applies the most recent cointegration tests under multiple structural breaks and extends the work of Okunade (J Health Econ 21(1):147–159, 2002) with the possibility whether a linear cointegration model with multiple structural breaks would provide a better economic model to quantify the impact of some major determinants of US real per capita health expenditure. This paper presents evidence to show that per capita real income, technology as indicated by four proxy measures and life expectancy at birth are some major drivers of real per capita health expenditure in the United States. Contrary to the available evidence in the literature, the finding of this paper is that the point aggregate income elasticity of health expenditure estimate is less than one, indicating that health care has evolved to become a necessity in the United States. Policy implications of the empirical findings are discussed in the paper.

AB - Using a longer span of available time series data and employing powerful unit root and cointegration tests that allow for multiple structural breaks, developed recently by Carrion-i-Silvestre et al. (Econ Theory 25:1754–1792, 2009), Perron and Yabu (J Bus Econ Stat 27:369–396, 2009), Kejriwal and Perron (J Econ 146(1):59–73, 2008; J Bus Econ Stat 28(4):503–522, 2010a; J Time Ser Anal 31:305–328, 2010b) and Maki (Econ Model 29:2011–2015, 2012), this paper empirically investigates, whether technology continues to be a major driver of real per capita health expenditure, along with some control variables such as per capita income and life expectancy, in the United States, during the period 1960–2012. Specifically, the paper applies the most recent cointegration tests under multiple structural breaks and extends the work of Okunade (J Health Econ 21(1):147–159, 2002) with the possibility whether a linear cointegration model with multiple structural breaks would provide a better economic model to quantify the impact of some major determinants of US real per capita health expenditure. This paper presents evidence to show that per capita real income, technology as indicated by four proxy measures and life expectancy at birth are some major drivers of real per capita health expenditure in the United States. Contrary to the available evidence in the literature, the finding of this paper is that the point aggregate income elasticity of health expenditure estimate is less than one, indicating that health care has evolved to become a necessity in the United States. Policy implications of the empirical findings are discussed in the paper.

UR - http://www.scopus.com/inward/record.url?scp=84986292348&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84986292348&partnerID=8YFLogxK

U2 - 10.1007/s10754-016-9196-2

DO - 10.1007/s10754-016-9196-2

M3 - Article

SP - 1

EP - 22

JO - International Journal of Health Economics and Management

JF - International Journal of Health Economics and Management

SN - 2199-9023

ER -