GMM estimation of spatial panels

We consider Generalized Method of Moments (GMM) estimation of a regression model with spatially correlated errors. We propose some new moment conditions, and derive the asymptotic distribution of the GMM based on them. The analysis is supported by a small Monte Carlo exercise.Generalized Method of Moments, spatial econometrics

Medical Technology and the Production of Health Care

This paper investigates the factors that determine differences across OECD countries inhealth outcomes, using data on life expectancy at age 65, over the period 1960 to 2007. We estimate a production function where life expectancy depends on health and social spending, lifestyle variables, and medical innovation. Our first set of regressions includes a set of observed medical technologies by country. Our second set of regressions proxy technology using a spatial process. The paper also tests whether in the long-run countries tend to achieve similar levels of health outcomes. Our results show that health spending has a significant and mild effect on health out- comes, even after controlling for medical innovation. However, its short-run adjustments do not seem to have an impact on health care productivity. Spatial spill overs in life expectancy are significant and point to the existence of interdependence across countries in technology adoption. Furthermore, nations with initial low levels of life expectancy tend to catch up with those with longer-lived populations

Social Interaction in Patients'�Hospital Choice: Evidences from Italy

In this paper we study the influence of social interaction on patients' hospital choice and its relationship with quality delivered by hospitals, using Italian data. We explore the impact on individual choices of a set of variables such as travel distance, individual- and hospital-specific characteristics, as well as a variable capturing the effect of the neighbourhood. The richness of our data allows us to disentangle contextual effects from the influence of information sharing on patients' hospital choices. We then use this framework to assess how such interaction is related to clinical hospital quality. Results show that network effect plays an important role in hospital choices, although it is less relevant for larger hospitals. Another empirical finding is the existence of a negative relationship between the degree of interaction among individuals and the quality delivered by hospitals. The absence of a source of information on the quality of hospitals accessible to all individuals, such as guidelines or star ratings, exacerbates the importance of information gathered locally in hospital choices, which may result in a lower degree of competition among hospitals and lower quality.health care, social interaction, quality

Health Expenditure and Income in the United States

This paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States followed over the period 1980-2004, we study the non-stationarity and cointegration between health spending and income, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross-section dependence and unobserved heterogeneity. Specifically, in our regression equations we assume that the error is the sum of a multifactor structure and a spatial autoregressive process, which capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we observe a significant spatial spill over, though with a smaller intensity than that detected in other studies on spatial concentration of US health spending. Our broad perspective of cross section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income.Health expenditure; income elasticity; cross section dependence; panels

Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data

This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.heterogeneous panels, cross section dependence, income elasticity, health expenditure, factor models

HAC estimation in spatial panels

© 2012 Elsevier B.V. All rights reservedWe propose a HAC estimator for the covariance matrix of the fixed effects estimator in a panel data model with unobserved fixed effects and errors that are both serially and spatially correlated.conomic and Social Research Council (grant RES-061-25-0317)