Skip to main content

Advertisement

SpringerLink
Log in

Determinants of Health Expenditure Growth of the OECD Countries: Jackknife Resampling Plan Estimates

  • Published:
Health Care Management Science Aims and scope Submit manuscript

Abstract

Due to the lack of internal consistency across unit root and cointegration test methods for short time-series data, past research findings conflict on whether the OECD health expenditure data are stationary. Stationarity reasonably guarantees that the estimated OLS relationship is nonspurious. This paper departs from past investigations that applied asymptotic statistical tests of unit root to insufficient time-series lengths. Instead, data were calibrated in annual growth rates, in 5-year (1968–72, ... , 1993–97) partitions, for maximum likelihood estimation using flexible Box–Cox transformations model and bias-reducing jackknife resampling plan for data expansion. The drivers of OECD health care spending growth are economic and institutional. Findings from the growth convergence theory affirm that health care expenditure growth accords with conditional β convergence. Statistical significance and optimal functional form models are not unique across the growth period models. Our findings exemplify the benefits of jackknife resampling plan for short data series, and caution researchers against imposing faulty functional forms and applying asymptotic statistical methods to short time-series regressions. Policy implications are discussed.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. T. Amemiya, Advanced Econometrics (Harvard University Press, Cambridge, MA, 1985).

    Google Scholar 

  2. A.C. Atkinson, Plots, Transformations and Regression. An Introduction to Graphical Methods of Diagnostic Regression Analysis, Oxford Statistical Science Series, Vol. 1 (Oxford University Press, Oxford, UK, 1985).

    Google Scholar 

  3. S.E. Atkinson and P.W. Wilson, The bias of bootstrapped versus conventional standard errors in the general linear and SUR models, Econometric Theory 8 (1992) 258–275.

    Google Scholar 

  4. R.J. Barro and X. Sala-i-Martin, Economic Growth (McGraw-Hill, Inc., New York, 1995).

    Google Scholar 

  5. P.P. Barros, The black box of health care expenditure growth determinants, Health Economics 7 (1998) 533–544.

    Article  Google Scholar 

  6. W.J. Baumol, Productivity growth, convergence, and welfare: What the long run data show, American Economic Review 76 (1986) 1072–1085.

    Google Scholar 

  7. W.A. Brock and S.N. Durlauf, Growth empirics and reality, World Bank Economic Review 15 (2001) 229–272.

    Article  Google Scholar 

  8. G.E.P. Box and D.R. Cox, An analysis of transformations, Journal of the Royal Statistical Society Series B 26 (1964) 211–243.

    Google Scholar 

  9. R. Butler and E.D. Rothman, Predictive intervals based on reuse of the sample, Journal of the American Statistical Association, Theory and Methods Section 75 (December 1980) 881–889.

  10. R.J. Carroll and D. Ruppert, Transformations and Weighting in Regression Analysis (Chapman and Hall, New York, 1988).

    Google Scholar 

  11. B. Efron, The Jackknife, the Bootstrap and Other Resampling Plans, CBMS-NSF Regional Conference Series in Applied Mathematics, Vol. 38, Sponsored by the Conference Board of The Mathematical Sciences, Supported by National Science Foundation (Printed for the Society for Industrial and Applied Mathematics by J.W. Arrowsmith Ltd., Bristol, England, 1982).

  12. B. Efron and R. Tibshirani, Bootstrap methods for standard errors, confidence intervals, and other measures of statistical accuracy, Statistical Science 1 (1986) 54–77.

    Google Scholar 

  13. B. Efron and R. Tibshirani, Rejoinder, Statistical Science 1 (1986) 77–79.

    Google Scholar 

  14. B. Efron and R. Tibshirani, An Introduction to the Bootstrap (Chapman and Hall, New York, 1993).

    Google Scholar 

  15. U.-G. Gerdtham, Pooling international health expenditure data, Health Economics 1 (1992) 217–231.

    Google Scholar 

  16. U.-G. Gerdtham and B. Jonsson, International comparisons of health expenditure: Theory, data and econometric analysis, in: Handbook of Health Economics, eds. A.J. Culyer and J.P. Newhouse (North-Holland, Amsterdam, 2000).

    Google Scholar 

  17. T. Getzen, Aging and health care expenditures: A comment on Zweifel, Felder and Meiers, Health Economics 10 (2001) 175–177.

    Google Scholar 

  18. W.H. Greene, Econometric Analysis, 3rd Ed. (Prentice Hall, New York, 1993).

    Google Scholar 

  19. P. Hansen and A. King, The determinants of health care expenditure: A cointegration approach, Journal of Health Economics 15 (1996) 127–137.

    Article  Google Scholar 

  20. J.A. Hartigan, Comment, Statistical Science 1 (1986) 75–77.

    Google Scholar 

  21. H. Herwartz and B. Theilen, The determinants of health care expenditure: Testing pooling restrictions in small samples, Health Economics 12 (2003), in press.

  22. P. Klenow, Comment on “It's not factor accumulation: Stylized facts and growth models”, World Bank Economic Review 15 (2001) 221–224.

    Article  Google Scholar 

  23. C. Leger, D. Politis and J. Romano, Bootstrap technology and applications, Technometrics 34 (November 1992) 378–398.

  24. A.N. Link, T.G. Seaks and S. Woodberry, Firm size and R&D spending: Testing for functional forms, Southern Economic Journal 54 (1988) 1027–1032.

    Google Scholar 

  25. G. MacDonald and S. Hopkins, Unit root properties of OECD health care expenditure and GDP data, Health Economics 11 (2002) 371–376.

    Article  Google Scholar 

  26. R.G. Miller, The jackknife-A review, Biometrika 61 (1974) 1–15.

    Google Scholar 

  27. R. Moore, Physics 6730 jackknife error estimates; http://www.physics. utah.edu/~detar/phycs6730/handouts/jackknife/jackknife/node1.htm (accessed October 16, 2003).

  28. N.R.V. Murthy and A.A. Okunade, Managed care, deficit financing, and aggregate health care expenditure in the US: A cointegration analysis, Health Care Management Science 3 (2000) 279–285.

    Article  Google Scholar 

  29. N.R.V. Murthy and I.S. Chen, The empirics of economic growth for OECD countries: Some new findings, Economics Letters 55 (1997) 425–429.

    Article  Google Scholar 

  30. J.P. Newhouse, Medical care costs: How much welfare loss? Journal of Economic Perspectives 6 (1992) 3–21.

    Google Scholar 

  31. OECD, New Directions in Health Policy, Health Policy Studies, No. 7 (Organization for Economic Cooperation and Development, Paris, 1995).

    Google Scholar 

  32. OECD, The Reform of Health Care: A Comparative Analysis of Seven OECD Countries, Health Policy Studies, No. 2 (OECD, Paris, France, 1992).

    Google Scholar 

  33. A. O'Hagan and J. Stevens, Assessing and comparing costs: How robust are the bootstrap and methods based on asymptotic normality? Health Economics 12 (2003) 33–49.

    Article  Google Scholar 

  34. A.A. Okunade and M.C. Karakus, Unit root and cointegration: Timeseries versus panel estimates for international health expenditure models, Applied Economics 33 (2001) 1131–1137.

    Article  Google Scholar 

  35. A.A. Okunade and V.N.R. Murthy, Technology as a 'major driver' of health care costs: A cointegration analysis of the Newhouse conjecture, Journal of Health Economics 21 (2002) 147–159.

    Article  Google Scholar 

  36. A.A. Okunade and C. Suraratdecha, Health care expenditure inertia in the OECD countries: A heterogeneous analysis, Health Care Management Science 3 (2000) 31–42.

    Article  Google Scholar 

  37. A.A. Okunade, Box-Cox vs. Modulus power family of response transformations, Atlantic Economic Journal 19 (1991) 57.

    Google Scholar 

  38. A.A. Okunade, H. Haryanto and D.B. Means, Testing the unbiasedness hypothesis of foreign exchange rates and the analysis of transformations, Review of Quantitative Finance and Accounting 6 (1996) 39–46.

    Article  Google Scholar 

  39. D. Parkin, A. McGuire and B. Yule, Aggregate health expenditures and national income: Is health care a luxury good? Journal of Health Economics 6 (1987) 109–127.

    Article  Google Scholar 

  40. E.A. Peden and M.S. Freeland, Insurance effects of US medical spending, 1960-1993, Health Economics 7 (1998) 671–687.

    Article  Google Scholar 

  41. M.H. Quenouille, Approximate tests of correlation in time-series, Journal of the Royal Statistical Society Series B 11 (1949) 68–84.

    Google Scholar 

  42. M.H. Quenouille, Notes on bias in estimation, Biometrika 43 (1956) 353–360.

    Google Scholar 

  43. J. Roberts, Sensitivity of elasticity estimates for OECD health care spending: Analysis of a dynamic heterogeneous data field, Health Economics 8 (1999) 459–472.

    Article  Google Scholar 

  44. P. Romer, Comment on "It's not factor accumulation: Stylized facts and growth models", World Bank Economic Review 15 (2001) 225–227.

    Article  Google Scholar 

  45. S.K. Sapra, A jackknife maximum likelihood estimator for the probit model, Applied Economics Letters 9 (2002) 73–74.

    Article  Google Scholar 

  46. N. Serup-Hansen, J. Wickstrøm and I.S. Kristiansen, Future health care costs-Do health care costs during the last year of life matter? Health Policy 62 (2002) 161–172.

    Article  Google Scholar 

  47. M. Seshamani and A.M. Gray, A longitudinal study of the effects of age and time to death on hospital costs, Journal of Health Economics (2004), in press.

  48. J.L. Simon and P. Bruce, Resampling: A tool for everyday statistical work, CHANCE. New Directions for Statistics and Computing 4 (1991) 22–32.

    Google Scholar 

  49. P.C. Smith, Measuring health system performance, European Journal of Health Economics 3 (2002) 145–148.

    Article  Google Scholar 

  50. B. Starfield and L. Shi, Policy relevant determinants of health: An international perspective, Health Policy 60 (2002) 201–218.

    Article  Google Scholar 

  51. F.S. Swed and C. Eisenhart, Tables for testing randomness of grouping in a sequence of alternatives, Annals of Mathematical Statistics 14 (1943).

  52. C.G. Tsangarides, On cross-country growth and convergence: Evidence from African and OECD countries, Journal of African Economies 10 (2002) 355–389.

    Article  Google Scholar 

  53. J.W. Tukey, Comparison of some ratio estimators, Journal of the American Statistical Society 60 (1965) 294–307.

    Google Scholar 

  54. M. Veall, Bootstrapping the process of model selection: An econometric example, Journal of Applied Econometrics 7 (1992) 93–99.

    Google Scholar 

  55. H. White, Estimation, Inference, and Specification Analysis (Cambridge University Press, Cambridge, 1994).

    Google Scholar 

  56. C.F.J. Wu, Jackknife, bootstrap and other resampling methods in regression analysis, Annals of Statistics 14 (1986) 1261–1295.

    Google Scholar 

  57. P. Zweifel, S. Felder and M. Meiers, Ageing of population and health care expenditure: A red herring? Health Economics 8 (1999) 485–496.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics, Rm. 450BB (The FCoBE), The University of Memphis, Memphis, TN 38152, USA

    Albert A. Okunade

  2. Department of Health Policy and Management, The Johns Hopkins University, Baltimore, MD, 21205, USA

    Mustafa C. Karakus

  3. College of Southern Nevada, Department of Economics and Regional Studies, Las Vegas, NV, USA

    Charles Okeke

Authors
  1. Albert A. Okunade
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Mustafa C. Karakus
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Charles Okeke
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Okunade, A.A., Karakus, M.C. & Okeke, C. Determinants of Health Expenditure Growth of the OECD Countries: Jackknife Resampling Plan Estimates. Health Care Management Science 7, 173–183 (2004). https://doi.org/10.1023/B:HCMS.0000039380.42784.20

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/B:HCMS.0000039380.42784.20

Search

Navigation