Abstract

We examine the time series properties of medical net discount rates based on five different medical consumer price indices, namely, medical care, medical services, medical care commodities, physician's services, and prescription drugs & medical supplies that were first analyzed by Ewing, Piette, and Payne (2003). Unlike Ewing, Piette, and Payne (2003), we test for the presence of a unit root in these series using statistics that allow for a break in the trend function at an unknown date, and find that all series are tend-break stationary. Therefore, practitioners should use medical net discount rate forecasts based on the estimated trend function in the post-break periods to calculate the present value of future medical costs.

Recommended Citation

Sen, Amit and Gelles, Gregory (2006) "On the Time Series Properties of Medical Net Discount Rates," Journal of Business Valuation and Economic Loss Analysis: Vol. 1 : Iss. 1, Article 4.
DOI: 10.2202/1932-9156.1003
Available at: http://www.bepress.com/jbvela/vol1/iss1/art4