The role of permanent and transitory shocks in explaining international health expenditures

Narayan, S and Narayan, P 2008, 'The role of permanent and transitory shocks in explaining international health expenditures', Health Economics, vol. 17, pp. 1171-1186.


Document type: Journal Article
Collection: Journal Articles

Title The role of permanent and transitory shocks in explaining international health expenditures
Author(s) Narayan, S
Narayan, P
Year 2008
Journal name Health Economics
Volume number 17
Start page 1171
End page 1186
Total pages 16
Publisher John Wiley and Sons Ltd
Abstract While there is a growing literature that examines the issue of cointegration (co-movement over the long run) among health expenditures, there are no studies that examine the issue of common cycles (co-movement over the short run) among health expenditures. We undertake a multivariate variance decomposition analysis of per capita health expenditures of the USA, the UK, Japan, Canada, and Switzerland based on a common-trend-common-cycle restriction framework, to examine the relative importance of permanent and transitory innovations in explaining variations in per capita health expenditures in each of the five countries. Our main finding is that transitory shocks are more important in explaining per capita health expenditures in the UK, Japan, and Switzerland, while permanent shocks dominate variations in per capita health expenditures in the USA and Canada over short horizons.
Subject Health Economics
Keyword(s) Permanent shocks
transitory shocks
Health Expenditure
Industrialized countries
DOI - identifier 10.1002/hec.1316
Copyright notice © 2007 John Wiley & Sons, Ltd.
ISSN 1057-9230
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