GSP and Health Expenditure in Italian Regions

This paper investigates the nexus between health care households’ expenditure and GSP for Italian regions
during 1980-2009, using time series and panel econometric techniques. After a brief introduction and a
survey of the economic literature on this issue, we discuss the data and briefly introduce t h e methodologies.
Empirical results show the presence of a long-run relationship in fifteen regions. As regards the causality analysis,
health-led growth hypothesis is supported in three regions, while the reverse causation appears in five cases. The
neutrality hypothesis seems to be confirmed in ten regions. Finally, a bi-directional causality flow (feedback
hypothesis) has been found for two regions. Panel analysis shows that, if our sample is divided into three more
homogeneous macro-regions (North, Centre and South), a long-run relationship between health expenditure and
aggregate income has been found in two areas. Furthermore, the income elasticity is below the unity, implying
that health expenditure is not a luxury good.