THE RELATIONSHIP BETWEEN HEALTH CARE EXPENDITURES AND INCOME IN THE SELECTED TRANSITION ECONOMIES: A PANEL SMOOTH TRANSITION REGRESSION ANALYSIS

The relationship between health care expenditure and income of transition economies which are members of the European Union are evaluated for the 1995 2011 period by Panel Smooth Transition Regression Model. In the study, a second model is established in order to evaluate the effect of age structure, which is an important factor in explaining changes in health care expenditures, by adding the ratio of population under 15 and the ratio of population over 65. In addition, the lagged value of the ratio of public expenditures on health care is added to the model. As a result of the study, there is only one relatively sharp transition observed if income and time are considered as explanatory variables in the related period, but actually by adding age structure variables this transition shows two rather smoother transition structures.