Premium
Time‐varying income elasticities of healthcare expenditure for the OECD and Eurozone
Author(s) -
Casas Isabel,
Gao Jiti,
Peng Bin,
Xie Shangyu
Publication year - 2021
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.2809
Subject(s) - economics , income elasticity of demand , elasticity (physics) , econometrics , health care , panel data , demographic economics , economic growth , materials science , composite material
Summary We propose a panel data model for nonstationary variables with interactive fixed effects and coefficients that may vary over time and use it to examine time variation in the income elasticity of health expenditures in the OECD and the Eurozone. Our empirical analysis shows that the income elasticity of healthcare expenditure slightly increased in the OECD and the Eurozone during 1995–2004 but remained below one. This finding suggests that healthcare is not a luxury good in these countries.