The relationship between healthcare expenditure and income in Latin-American countries: A panel time

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June 2017
Paper author(s): 
Elisabet Rodriguez Llorian
Janelle Mann
Education - Health
Financial Economics

This presentation examines the link between healthcare expenditure and GDP in Latin American and Caribbean countries using the Stata command xtwest to estimate the error-correction-based cointegration tests for panel data featured in The Stata Journal (Persyn and Westerlund, 2008). Extensions of unit root and cointegration tests to a panel data-approach allow investigation of the dynamics for developing countries, which tend to have shorter available time series. I employ several unit-root tests coded as xtunitroot to determine whether the panel is stationary and Westerlund (2007) coded as xtwest to analyze the relationship and dynamics between health expenditure (total, private, and public) and income. Cointegration tests for panel data have increased power properties over traditional tests because of increased degrees of freedom and the inclusion of heterogeneous cross-country information. Results suggest that all categories of health expenditure move to maintain a stable long-run equilibrium. This presentation is an interesting case study of the use of Stata commands within economics. All empirical analysis was conducted in Stata and will highlight several recent developments within time-series techniques applied to panel data that have yet to be coded within Stata to make said tools accessible to researchers.


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