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Please use this identifier to cite or link to this item: http://hdl.handle.net/2381/7471

Title: Health expenditure and income in the United States
Authors: Tosetti, Elisa
Moscone, Francesco
Issue Date: Oct-2007
Publisher: Dept. of Economics, University of Leicester
Abstract: This paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States followed over the period 1980-2004, we study the non-stationarity and cointegration between health spending and in- come, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross-section dependence and unobserved heterogeneity. Speci cally, in our regression equations we as- sume that the error is the sum of a multifactor structure and a spatial autoregressive process, which capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we observe a signi cant spatial spill over, though with a smaller intensity than that detected in other studies on spatial concentration of US health spending. Our broad perspective of cross section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income.
Series/Report no.: Papers in Economics
07/14
Links: http://www.le.ac.uk/economics/research/d(...)
http://hdl.handle.net/2381/7471
Type: Report
Appears in Collections:Reports, Dept. of Economics

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