Health care expenditure and GDP: are they broken stationary?

Abstract

In this paper, we analyse the stationarity of the real per capita health care expenditure (HCE) and real per capita GDP for a sample of OECD countries, allowing for the presence of multiple structural breaks. One novelty of the paper is that it permits the presence of structural breaks that affect both the level and the slope of the time series. After the cross-section dependence is accounted for, we have found that these variables can be characterised as stationary processes evolving around a broken trend.