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Healthcare expenditure and carbon footprint in the USA: evidence from hidden cointegration approach

The European Journal of Health Economics volume 21, pages 801–811 (2020)Cite this article

A Correction to this article was published on 21 October 2020

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Abstract

The priority aim of this study is to investigate the effect of carbon footprint, which is an indicator of environmental degradation, on health expenditures for the USA. In the study, cointegration analysis was performed for the period 1970–2016 by using health expenditures, carbon footprint, gross domestic product per capita and life expectancy at birth variables. According to the results of standard cointegration analysis, only cointegration relationship between health expenditures and income was found. In the models with carbon footprint, no cointegration relationship was discovered between the original values of the variables. This result was approached with suspicion, and it was thought that there might be a hidden cointegration between healthcare expenditures and carbon footprint. For this purpose, the hidden cointegration analysis and crouching error correction model proposed by Granger and Yoon [18] were employed among the positive and negative components of the variables of healthcare expenditures and carbon footprint. The results of the hidden cointegration analysis revealed that there was a hidden cointegration relationship between the positive components of healthcare expenditures and the positive components of carbon footprint. Analysis results show that a 1% increase in carbon footprint will cause a 2.04% increase in healthcare expenditures in the long term in the USA. When the positive components of the variables were considered, it was concluded that there was a one-way long-term asymmetric causality relationship between carbon footprint and healthcare expenditures. As a result of the study, it was proposed that the carbon footprint should be diminished to prevent the increasing burden of the healthcare expenditures on the budget.

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Fig. 1

Source: OECD Health Statistics Database

Fig. 2

Source: Global Footprint Network

Change history

  • 21 October 2020

    The author would like to correct the errors in the publication of the original article.

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  1. Faculty of Economics and Administrative Sciences, Department of Econometrics, Usak University, Usak, Turkey

    Murat Gündüz

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Gündüz, M. Healthcare expenditure and carbon footprint in the USA: evidence from hidden cointegration approach. Eur J Health Econ 21, 801–811 (2020). https://doi.org/10.1007/s10198-020-01174-z

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Keywords

  • Healthcare expenditure
  • Carbon footprint
  • Carbon emissions
  • Environmental quality
  • Hidden cointegration
  • Crouching error correction

JEL Classification

  • H51
  • I18
  • C13
  • Q51