Empirical evidence on the long and short run determinants of health expenditure in the Arab world

Panel causality JEL: C - Mathematical and Quantitative Methods/C.C3 - Multiple or Simultaneous Equation Models • Multiple Variables/C.C3.C33 - Panel Data Models • Spatio-temporal Models Arab world 05 social sciences 1. No poverty [SHS.ECO]Humanities and Social Sciences/Economics and Finance JEL: I - Health, Education, and Welfare/I.I1 - Health/I.I1.I15 - Health and Economic Development Health expenditure 3. Good health JEL: P - Economic Systems/P.P4 - Other Economic Systems/P.P4.P46 - Consumer Economics • Health • Education and Training • Welfare, Income, Wealth, and Poverty Panel cointegration 0502 economics and business JEL: H - Public Economics/H.H5 - National Government Expenditures and Related Policies/H.H5.H51 - Government Expenditures and Health [SHS.ECO] Humanities and Social Sciences/Economics and Finance
DOI: 10.1016/j.qref.2018.11.009 Publication Date: 2018-12-05T12:46:47Z
ABSTRACT
This paper empirically examines the determinants of health care spending for 18 Arab world countries for the period 1995–2015 by using recently developed panel cointegration techniques. We conducted the same estimations for 3 sub-samples, namely high-income, upper-middle- and lower-middle-income countries to reduce the heterogeneity among them. Our empirical findings demonstrate that health care expenditure and its determinants are non-stationary, and revealed the existence of a long run relationship among variables. Furthermore, the estimation results suggest that income is not the only driver of health expenditure in the Arab world countries in the long run. Other variables such as medical progress and ageing population are also playing an important role in the increase of health care expenditure with major policy implications for the region in the long run. Furthermore, the results support that health care expenditure is a necessity good for the three income groups. Finally, the Pairwise Dumitrescu-Hurlin panel causality test shows evidence of a bidirectional causal relationship between health care expenditures and income for the full sample, as well as for the groups income.
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