Conversion Factor Instability in International Comparisons of Health Care Expenditure

Parkin, McGuire and Yule (1987) (hereafter PMY) report that a regression of per capita health care expenditure on per capita income using different conversion factors (exchange rates, GDP PPPs, health PPPs) gave rise to different results. In this note we apply updated data to the same empirical relationship. In contrast to PMY, we find no noticeable conversion factor instability in that relationship either with respect to the health care income elasticity or with the magnitude of multiple correlation coefficient.