Geographic and temporal heterogeneity in public prescription pharmaceutical expenditures in Spain

Abstract

A panel of aggregate data for 50 provinces is used to analyze Spain's per capita public pharmaceutical expenditures. In contrast to previous practice, our approach permits the analysis of the effects determinants on pharmaceutical expenditure to be heterogeneous across years and provinces. Considerable parametric heterogeneity over time as well as across provinces is found, even after controlling for residual temporal heterogeneity and interdependence as well as residual spatial spillovers. This underlines the need for using disaggregate spatial data when attempting to model macroeconomic behavior. © Southern Regional Science Association 2010.