Health care expenditures and GDP: panel data unit root test results

Abstract

This short paper presents unit root test results for time series on per capita national health care expenditures and gross domestic product in the OECD. Unlike the country-by-country test used by [Hansen, P., King, A., 1996. The determinants of health care expenditure: A cointegration approach. J. Health Econ, 15, 127-137], the test we employ exploits the panel nature of the OECD data. Using this approach, we are able to reject the null hypothesis that these series contain unit roots. No single test is likely to be definitive in this rapidly-evolving area of econometric research; however, our results help to mitigate concern that panel data analyses of national health care expenditures are misspecified.