Dependent Variable: D (LRPP) Method: Least Squares Date: 05/25/04 Time: 10:57 Sample: 1960–2001 Included observations: 42

Variable

Coefficient

Standard Error

tStatistic

PValue

D(LGDP(1))

0.389742

0.104793

3.719164

0.0007

D(LPUB(1))

0.086158

0.036614

2.353126

0.0242

D(LPUB(1))*D92

0.579867

0.223008

2.600213

0.0134

D(LRPP(1))

0.854943

0.131145

6.519069

0.0000

D(LRPP(2))

0.375947

0.127824

2.941118

0.0057

WH

0.035633

0.007753

4.596012

0.0001

Rsquared

0.865946

Mean dependent variable

0.002188

Adjusted Rsquared

0.847327

S.D. dependent variable

0.039870

S.E. of regression

0.015578

Akaike info criterion

5.354293

Sum squared residuals

0.008737

Schwarz criterion

5.106055

Log likelihood

118.4402

DurbinWatson statistic

1.950186






Definitions of the Variables:

D(LRPP) = change from one year to the next of the logarithm of the real drug price, defined as the ratio of the pharmaceutical price index to general consumer price index.

D(LGDP(1)) = lagged value of the change from one year to the next of the logarithm of real gross domestic product per capita (measure of the growth of economic activity).

D(LPUB(1)) = lagged value of the change from one year to the next of the logarithm of the government’s share of pharmaceutical spending (growth of government influence).

D92 = 0/1 dummy variable taking on the value of 1 for years after 1991 to capture the effects of OBRA of 1990 and the Veterans Act of 1992 (change in the growth of government influence).

D(LRPP(1)), D(LRPP(2)) = lagged values of the change from one year to the next of the real drug price (i.e., the prior one and two years of real drug price growth).

WH = 0/1 dummy variable taking on the value of 1 after 1983 to capture the presence of the Waxman/Hatch Act.
