A panel vector autoregression analysis for the dynamics of medical and long-term care expenditures.

Although medical and long-term care expenditures for older adults are closely related, providing rigorous statistical analysis for their dynamic relationship is challenging. In this research, we propose a novel approach using the panel vector autoregression model to reveal the realized patterns of the interdependence. As an empirical application, we analyze monthly panel data on individuals in a city of Japan, where social insurance covers many formal services for long-term care.