Healthcare expenditure and GDP in Ethiopia from 1995 to 2014: a time-series analysis

Abstract

[...]high-income countries exhibited a per capita health expenditure of over US dollar (USD) 3000 on average, while resource-poor countries exhibited only USD 30 per capita. [...]it is impossible to say conclusively about the stationary characteristics of these series based on plots. [...]we have used a statistical method to test the stationary character, called augmented Dickey–Fuller (ADF) unit root test having a model, as follows: $$\Delta y_{t} = \alpha + \beta t + \gamma y_{t - 1} + \delta_{1}\Delta y_{t - 1} + \cdots + \delta_{p - 1}\Delta y_{t - p + 1} + \varepsilon_{t} ;$$ where yt is variable of interest (HCE or GDP), t is a time index, Δ is the first difference operator, β is a coefficient, α is a constant, ε is error term, and γ is a hypothesis value of γ = 0 versus γ < 0. Since the results of this test confirm that all of the variables are integrated of the same order, it implies that the variables as a group may be co-integrated in the long run. [...]to check the long-run equilibrium relationship between the variables, Johansen [27] multivariate cointegration test was employed. [...]this study empirically examines the income elasticity of HCE using the time-series regression with ordinary least square (OLS) estimation approach.