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Social Indicators Research

, Volume 122, Issue 2, pp 347–370 | Cite as

The Impact of GDP on Health Care Expenditure: The Case of Italy (1982–2009)

  • Silvia Fedeli
Article

Abstract

Italian health care expenditure (HCE) has been basically explained with two main groups of theories. (1) Those explaining the peculiarity of the HCE growth as depending on demand and supply factors, such as aging population, number of practising physicians per capita, mix of public and private hospitals, number of hospital beds,… (2) Those explaining the growth of total public expenditure as a common feature among industrialized countries, with a huge empirical literature emphasising the role of GDP and/or other structural/institutional variables as the main determinants of HCE across countries. In order to reassess previous findings, we exploit recent results on panel cointegration analysis and test the regional Italian data on HCE and GDP, also taking into account cross-section correlation. The results show that HCE and GDP are cointegrated. The long- and short-term dynamics of HCE are estimated. Our results, providing an empirical support for the existence of Wagner’s law, have important policy implications in terms of fiscal sustainability: as income rises, people will choose relatively more HCE. Given the level of the public debt in Italy, any further increases would imply that future government spending may be mainly directed toward debt servicing, likely at the expense of public expenditure on basic infrastructure.

Keywords

Italian health care regional expenditure Panel cointegration analysis Cross-section correlation Wagner’s law 

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Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  1. 1.Department of Economics and Law, Faculty of EconomicsSapienza – University of RomeRomeItaly

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