Covergence in health care expenditure. An application of the Phillips & Sul methodology.

Abstract

The present study investigates the convergence hypothesis in Health Care Expenditure, Health Outcomes and per capita Gross Domestic Product (GDP) in three different groups of countries (G7, OECD and Eurozone) for the period 1972-2010. For this purpose, a new empirical test, developed by Philips & Sul (2007a), is used based on panel data. Our findings provide evidence of convergence in health care expenditure among the members of each one of the three groups of countries under scrutiny. The only exception is the United States that seems to diverge from the remaining countries. When we test for convergence in health outcomes and per capita GDP, the results are mixed. In some cases full convergence is supported but we also find cases of club convergence.