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Convergence in Health Care Expenditure of 14 EU Countries: New Evidence from Non-linear Panel Unit Root Test

Lau, Marco Chi Keung and Fung, Ka Wai Terence (2013): Convergence in Health Care Expenditure of 14 EU Countries: New Evidence from Non-linear Panel Unit Root Test.

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Abstract

This paper attempts to examine the convergence hypothesis of health care expenditure per capita of 14 European Union (EU) countries during the 1975–2008 period by applying the Cerrato et al., (2009) nonlinear panel unit root test. Although the conventional linear panel unit root tests reject the null uniformly, the Cerrato et al., (2009) test shows evidence that one cannot reject the null hypothesis of unit root for health care expenditures of each country relative to the EU average, after taking nonlinearity into account. Our results are robust using different reference countries. The empirical findings imply that the exisitng “ EU health policy reforms” and “ European law on health care provision” may not able to encourage greater health care convergence in EU.

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