Estimation the Income Elasticity of Per Capita Health Care Expenditure in D8 Countries: PSTR and MG Approaches
Subject Areas : medical documents
Ali
Rezazadeh
1
(Urmia University)
moohamad
Kalamie
2
(Lecturer, Department of Economics, Islamic Azad University, Mamaghan Branch, East Azerbaijan, Iran)
Saber
Khodaverdizadeh
3
(Student of International Economics, Tabriz University, East Azerbaijan, Iran)
Mostafa
Shokri
4
(PhD Student of International Economics, Tabriz University, East Azerbaijan, Iran)
Keywords: Health expenditure per capita, D8 Group Countries, MG, PSTR, Economic Welfare,
Abstract :
Introduction: Economic welfare is highly dependent on the health expenditure share of national output. In this regard, the purpose of this paper was to investigate the relationship between health expenditure and economic welfare in D8 countries and assessment of commodity group of health expenditure in this countries. Methods: In order to investigate the relationship between health expenditure and economic welfare in D8 countries during 1995-2014, Panel smooth transition regression method was used. Also to verify the long- run relationship between variables and for selection kind of commodity group Panel mean of group method was used. Results: Moreover, considering one transition function and one threshold parameter, as a two regime model, is sufficient to specification of nonlinear relationship between variables. The results indicate that threshold value is 7.21 and the estimated slope parameter is 17.56. Conclusion: GDP per capita in the first (The linear part) and second regimes (The sum of the linear and nonlinear parts) has positive impact on health expenditure per capita in D8 countries. The public health costs of population 0-14 and 65-years and older group has negative effects in first regime, and after crossing a threshold and enter the second regime, has positive effects on health expenditure per capita in D8 countries. Finally the results of the PMG approach suggests that the income elasticity of health goods in D8 countries is less than the unit and it is not considered a luxury commodity. Introduction: Economic welfare is highly dependent on the health expenditure share of national output. In this regard, the purpose of this paper was to investigate the relationship between health expenditure and economic welfare in D8 countries and assessment of commodity group of health expenditure in this countries.Methods: In order to investigate the relationship between health expenditure and economic welfare in D8 countries during 1995-2014, Panel smooth transition regression method was used. Also to verify the long- run relationship between variables and for selection kind of commodity group Panel mean of group method was used.Results: Moreover, considering one transition function and one threshold parameter, as a two regime model, is sufficient to specification of nonlinear relationship between variables. The results indicate that threshold value is 7.21 and the estimated slope parameter is 17.56.Conclusion: GDP per capita in the first (The linear part) and second regimes (The sum of the linear and nonlinear parts) has positive impact on health expenditure per capita in D8 countries. The public health costs of population 0-14 and 65-years and older group has negative effects in first regime, and after crossing a threshold and enter the second regime, has positive effects on health expenditure per capita in D8 countries. Finally the results of the PMG approach suggests that the income elasticity of health goods in D8 countries is less than the unit and it is not considered a luxury commodity.
1- Beheshti MB, Sojoudi S. Experimental analysis of the relationship between health expenditures and gross domestic product in Iran. Economic Studies Quarterly, 2008; 4(4): 95-115. [Persian]
2- Mehrara M, Fazaeli AA. The Relationship Health Costs and Economic Growth in MENA Countries. Journal of Health Management, 2009; 35(12): 49-59. [Persian]
3- Sabagh Kerrmani M. Iran Health Economic: Iran: The Center of Development and Research of Human Science Tehran: Samt Publication; 2006: 265. [In Persian]
4- Newhouse JP. Medical-care expenditure: a cross-national survey. J Hum Resour, 1977; 12(1): 115-25.
5- Lotfalipour M., Borji M. Health effects on economic development and its compatibility with Islamic teachings. Conference on Islamic Economics and Development; 2011. [Persian]
6- Barro R. Health and economic growth. Health and Economic Growth; 1996.
7- Mushkin SJ. Health as an Investment. Journal of Political Economy, 1962; 70: 129-157.
8- Fuchs VR. The Contribution of Health Services to the American Economy. Milbank Memorial Quarterly, 1966; 44(4): 65-103.
9- Grossman M. On the Concept of Health Capital and the Demand for Health. Journal of Political Economy, 1972; 80(2): 55-223.
10- Ghanbari A, Baskha M. The effects of government health spending on economic growth in Iran. Journal of Economic Research, 2009; 43(2): 187-224. [Persian]
11- Marzban H. The role of health and education in the economic growth of some developing countries. Journal of economic knowledge, 2011; 1(1): 33-49. [Persian]
12- Weil DH. Accounting for the effect of health on economic growth. The Quarterly Journal of Economics, 2006; 122(3): 1265-1306.
13- Leu R. The Public-Private Mix and International Health Care Cost, in Public and Private Health Services, in A. J. Culyer and B. Jonsson A.J. (eds.). Basil Blackwell: Oxford; 1986: 41 – 63.
14- Parkin D, McGuire A, and Yule B. Aggregate Health Care Expenditures and National Income: Is Health Care a Luxury Good? Journal of Health Economics, 1987; 6(2): 109-27.
15- Poullier JP, World Health Organization. Patterns of Global Health Expenditures: Results for 191 Countries. Geneva: World Health Organization; 2002.
16- Hopkins S, & MacDonald, G. The relationship between health expenditure and GDP in Australia: Evidence from a New Approach. Edited by International Society for System Science and Health Care and Semmelweis University, 2000; 11: 173-181.
17- Erdil E, Yetkiner IH. Panel data approach for income health causality. Hamburg University: Research unit Sustainability and Global Change, Working Papers; 2004.
18- Mehmood B, Reza, H, Mureed, SH. Health Expenditure, Literacy and Economic Growth: PMG Evidence from Asian Countries, Euro-Asian. Journal of Economics and Finance, 2014; 2(4): 408-417.
19- Zortuk M, Çeken S. The Relationship between Health Care Expenditures and Income in the Selected Transition Economies: A Panel Smooth Transition Regression Analysis. Journal for Economic Forecasting, 2015; 18(2): 105-118.
20- Chaaboini S, Zghidi N, & Mbarek MB. On the causal dynamics between CO2 emissions, health expenditures and economic growth. Journal of Sustainable Cities and Society, 2016; 22: 184-191.
21- Fattahi, SH, Soheili K, Reshadat S, Karim P. The relationship of health human capital and economic growth in the countries of OPEC. Journal of Health Care Management, 2014; 3(3): 37-51. [Persian]
22- Sarlak A. The impact of health indicators on the economic growth of the state. Journal of Healthcare Management, 2016; 6(1): 7-17. [Persian]
23-Panahi H, Imran A. The effect of government health spending on economic growth in countries of the Organization for Economic Cooperation Group D8. Journal of Health and Development, 2015; 4:327-336. [Persian]
24- Fok D, Van Dijk D, Franses P. A Multi-Level Panel STAR Model for US Manufacturing Sectors. Journal of Applied Econometrics, 2005; 20(6): 811-827.
25- Gonzalez A., Terasvirta T, Van Dijk D. Panel Smooth Transition Regression Models. Working Paper Series in Economics and Finance; 2005.
26- Jude E. Financial Development and Growth: A Panel Smooth Regression Approach. Journal of Economic Development, 2010; 35: 15-33.
27- Luukkonen R. Testing Linearity Against Smooth Transition Autoregressive Models. Biometrika, 1988; 75(3): 491-499.
28- Terasvirta T. Modeling Economic Relationships with Smooth Transition Regressions. in A. Ullah & D.E. Giles (eds.),Handbook of Applied Economic Statistics, Dekker, New York; 1998: 507–55.
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1- Beheshti MB, Sojoudi S. Experimental analysis of the relationship between health expenditures and gross domestic product in Iran. Economic Studies Quarterly, 2008; 4(4): 95-115. [Persian]
2- Mehrara M, Fazaeli AA. The Relationship Health Costs and Economic Growth in MENA Countries. Journal of Health Management, 2009; 35(12): 49-59. [Persian]
3- Sabagh Kerrmani M. Iran Health Economic: Iran: The Center of Development and Research of Human Science Tehran: Samt Publication; 2006: 265. [In Persian]
4- Newhouse JP. Medical-care expenditure: a cross-national survey. J Hum Resour, 1977; 12(1): 115-25.
5- Lotfalipour M., Borji M. Health effects on economic development and its compatibility with Islamic teachings. Conference on Islamic Economics and Development; 2011. [Persian]
6- Barro R. Health and economic growth. Health and Economic Growth; 1996.
7- Mushkin SJ. Health as an Investment. Journal of Political Economy, 1962; 70: 129-157.
8- Fuchs VR. The Contribution of Health Services to the American Economy. Milbank Memorial Quarterly, 1966; 44(4): 65-103.
9- Grossman M. On the Concept of Health Capital and the Demand for Health. Journal of Political Economy, 1972; 80(2): 55-223.
10- Ghanbari A, Baskha M. The effects of government health spending on economic growth in Iran. Journal of Economic Research, 2009; 43(2): 187-224. [Persian]
11- Marzban H. The role of health and education in the economic growth of some developing countries. Journal of economic knowledge, 2011; 1(1): 33-49. [Persian]
12- Weil DH. Accounting for the effect of health on economic growth. The Quarterly Journal of Economics, 2006; 122(3): 1265-1306.
13- Leu R. The Public-Private Mix and International Health Care Cost, in Public and Private Health Services, in A. J. Culyer and B. Jonsson A.J. (eds.). Basil Blackwell: Oxford; 1986: 41 – 63.
14- Parkin D, McGuire A, and Yule B. Aggregate Health Care Expenditures and National Income: Is Health Care a Luxury Good? Journal of Health Economics, 1987; 6(2): 109-27.
15- Poullier JP, World Health Organization. Patterns of Global Health Expenditures: Results for 191 Countries. Geneva: World Health Organization; 2002.
16- Hopkins S, & MacDonald, G. The relationship between health expenditure and GDP in Australia: Evidence from a New Approach. Edited by International Society for System Science and Health Care and Semmelweis University, 2000; 11: 173-181.
17- Erdil E, Yetkiner IH. Panel data approach for income health causality. Hamburg University: Research unit Sustainability and Global Change, Working Papers; 2004.
18- Mehmood B, Reza, H, Mureed, SH. Health Expenditure, Literacy and Economic Growth: PMG Evidence from Asian Countries, Euro-Asian. Journal of Economics and Finance, 2014; 2(4): 408-417.
19- Zortuk M, Çeken S. The Relationship between Health Care Expenditures and Income in the Selected Transition Economies: A Panel Smooth Transition Regression Analysis. Journal for Economic Forecasting, 2015; 18(2): 105-118.
20- Chaaboini S, Zghidi N, & Mbarek MB. On the causal dynamics between CO2 emissions, health expenditures and economic growth. Journal of Sustainable Cities and Society, 2016; 22: 184-191.
21- Fattahi, SH, Soheili K, Reshadat S, Karim P. The relationship of health human capital and economic growth in the countries of OPEC. Journal of Health Care Management, 2014; 3(3): 37-51. [Persian]
22- Sarlak A. The impact of health indicators on the economic growth of the state. Journal of Healthcare Management, 2016; 6(1): 7-17. [Persian]
23-Panahi H, Imran A. The effect of government health spending on economic growth in countries of the Organization for Economic Cooperation Group D8. Journal of Health and Development, 2015; 4:327-336. [Persian]
24- Fok D, Van Dijk D, Franses P. A Multi-Level Panel STAR Model for US Manufacturing Sectors. Journal of Applied Econometrics, 2005; 20(6): 811-827.
25- Gonzalez A., Terasvirta T, Van Dijk D. Panel Smooth Transition Regression Models. Working Paper Series in Economics and Finance; 2005.
26- Jude E. Financial Development and Growth: A Panel Smooth Regression Approach. Journal of Economic Development, 2010; 35: 15-33.
27- Luukkonen R. Testing Linearity Against Smooth Transition Autoregressive Models. Biometrika, 1988; 75(3): 491-499.
28- Terasvirta T. Modeling Economic Relationships with Smooth Transition Regressions. in A. Ullah & D.E. Giles (eds.),Handbook of Applied Economic Statistics, Dekker, New York; 1998: 507–55.
